Question 1

Shareholders that are involved in the management of a corporation are most likely involved in a closely held corporation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be a typical item of business at the organizational meeting of a corporation?

Accepted Answer

A)  adoption of bylaws 
B)  election of corporate officers 
C)  selection of promoters 
D)  authorizing the issuance of shares of stock 
E)  choosing an auditor 
A)  adoption of bylaws 
B)  election of corporate officers 
C)  selection of promoters 
D)  authorizing the issuance of shares of stock 
E)  choosing an auditor

Question 3

The bylaws of a corporation:

Accepted Answer

A)  take precedence over the articles of incorporation 
B)  must be filed in the appropriate state office 
C)  are not binding on the officers and directors of the corporation 
D)  govern the internal management of the corporation and typically would include the time and place of the annual shareholders' meeting 
A)  take precedence over the articles of incorporation 
B)  must be filed in the appropriate state office 
C)  are not binding on the officers and directors of the corporation 
D)  govern the internal management of the corporation and typically would include the time and place of the annual shareholders' meeting

Question 4

Corporations are the most dominant form of business organization in the United States.

Accepted Answer

A) True 
 B)False

Question 5

A corporation can be formed for "any lawful purpose."

Accepted Answer

A) True 
 B)False

Question 6

A corporation's articles of incorporation and bylaws must be filed with the appropriate state agency.

Accepted Answer

A) True 
 B)False

Question 7

The board of directors,as well as the shareholders,has the right to amend the bylaws of a corporation.

Accepted Answer

A) True 
 B)False

Question 8

If a corporation commits an ultra vires act,which of the following is not an available remedy?

Accepted Answer

A)  The shareholders may sue for an injunction prohibiting the act. 
B)  The shareholders may sue the officers and/or directors for damages. 
C)  The state attorney general may bring criminal charges against the officers and/or directors. 
D)  The state attorney general may sue to dissolve the corporation. 
A)  The shareholders may sue for an injunction prohibiting the act. 
B)  The shareholders may sue the officers and/or directors for damages. 
C)  The state attorney general may bring criminal charges against the officers and/or directors. 
D)  The state attorney general may sue to dissolve the corporation.

Question 9

Which of the following is true about the registered agent of a corporation?

Accepted Answer

A)  The registered agent is the chief promoter in the formation of the corporation. 
B)  The registered agent is the entity designated to receive service of process on behalf of the corporation. 
C)  The registered agent must be an individual person. 
D)  The registered agent is the party authorized to enter into contracts on behalf of the corporation. 
E)  The registered agent is the corporation's outside legal counsel. 
A)  The registered agent is the chief promoter in the formation of the corporation. 
B)  The registered agent is the entity designated to receive service of process on behalf of the corporation. 
C)  The registered agent must be an individual person. 
D)  The registered agent is the party authorized to enter into contracts on behalf of the corporation. 
E)  The registered agent is the corporation's outside legal counsel.

Question 10

A corporation cannot be established that has a fixed termination date.

Accepted Answer

A) True 
 B)False

Question 11

What is the significance of the term "preferred" in reference to preferred stock?

Accepted Answer

A)  It is viewed to generally be a better investment than common stock. 
B)  Preferred stockholders usually have better voting rights than common stockholders. 
C)  Preferred stockholders receive preference over creditors of the corporation in the event of liquidation. 
D)  Preferred stockholders receive certain preferences over common stockholders with respect to dividends or with respect to assets in the event of liquidation. 
E)  Only shareholders owning a certain minimum amount of common stock are entitled to purchase preferred stock. 
A)  It is viewed to generally be a better investment than common stock. 
B)  Preferred stockholders usually have better voting rights than common stockholders. 
C)  Preferred stockholders receive preference over creditors of the corporation in the event of liquidation. 
D)  Preferred stockholders receive certain preferences over common stockholders with respect to dividends or with respect to assets in the event of liquidation. 
E)  Only shareholders owning a certain minimum amount of common stock are entitled to purchase preferred stock.

Question 12

In order to be effective,shareholder approval for an amendment to the articles is needed:

Accepted Answer

A)  for all amendments 
B)  only for amendments that are not filed 
C)  for all amendments except those not affecting the rights attached to shares of stock 
D)  only for amendments that the board does not approve 
A)  for all amendments 
B)  only for amendments that are not filed 
C)  for all amendments except those not affecting the rights attached to shares of stock 
D)  only for amendments that the board does not approve

Question 13

The person empowered by the corporation to receive notice of lawsuits against it is called the:

Accepted Answer

A)  incorporator 
B)  promoter 
C)  registered agent 
D)  president 
E)  director du jour 
A)  incorporator 
B)  promoter 
C)  registered agent 
D)  president 
E)  director du jour

Question 14

An ultra vires act will generally cause dissolution of the corporation.

Accepted Answer

A) True 
 B)False

Question 15

A particular issue of stock carries a stated dividend rate of 8 percent; that if this dividend is not paid during a particular year,it will be paid in a subsequent year before common stock dividends are paid; and that upon liquidation of the corporation,the owner will receive $300 per share before the common stockholders get anything.This stock is:

Accepted Answer

A)  common stock 
B)  preferred stock 
C)  cumulative preferred stock with a liquidation preference 
D)  noncumulative preferred stock with a liquidation preference 
E)  cumulative,participating preferred stock with a liquidation preference 
A)  common stock 
B)  preferred stock 
C)  cumulative preferred stock with a liquidation preference 
D)  noncumulative preferred stock with a liquidation preference 
E)  cumulative,participating preferred stock with a liquidation preference

Question 16

Implied powers are nonexistent in terms of accomplishing a corporate purpose.

Accepted Answer

A) True 
 B)False

Question 17

A voluntary dissolution of a corporation generally requires approval by a majority of the shares entitled to vote.

Accepted Answer

A) True 
 B)False

Question 18

The procedure for incorporating a corporation is the same in every state.

Accepted Answer

A) True 
 B)False

Question 19

Nonprofit corporations can be formed only for certain purposes.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following numbers of shares could properly exist in a corporation?

Accepted Answer

A)  100,000 authorized,90,000 issued,and 80,000 outstanding 
B)  100,000 authorized,90,000 outstanding,and 80,000 issued 
C)  100,000 issued,90,000 outstanding,and 80,000 authorized 
D)  100,000 outstanding,90,000 issued,and 80,000 authorized 
E)  A or C 
A)  100,000 authorized,90,000 issued,and 80,000 outstanding 
B)  100,000 authorized,90,000 outstanding,and 80,000 issued 
C)  100,000 issued,90,000 outstanding,and 80,000 authorized 
D)  100,000 outstanding,90,000 issued,and 80,000 authorized 
E)  A or C

Exam 36: Corporate Formation and Financing

Shareholders that are involved in the management of a corporation are most likely involved in a closely held corporation.

Which of the following would not be a typical item of business at the organizational meeting of a corporation?

The bylaws of a corporation:

Corporations are the most dominant form of business organization in the United States.

A corporation can be formed for "any lawful purpose."

A corporation's articles of incorporation and bylaws must be filed with the appropriate state agency.

The board of directors,as well as the shareholders,has the right to amend the bylaws of a corporation.

If a corporation commits an ultra vires act,which of the following is not an available remedy?

Which of the following is true about the registered agent of a corporation?

A corporation cannot be established that has a fixed termination date.

What is the significance of the term "preferred" in reference to preferred stock?

In order to be effective,shareholder approval for an amendment to the articles is needed:

The person empowered by the corporation to receive notice of lawsuits against it is called the:

An ultra vires act will generally cause dissolution of the corporation.

Implied powers are nonexistent in terms of accomplishing a corporate purpose.

A voluntary dissolution of a corporation generally requires approval by a majority of the shares entitled to vote.

The procedure for incorporating a corporation is the same in every state.

Nonprofit corporations can be formed only for certain purposes.

Which of the following numbers of shares could properly exist in a corporation?

Legal Heritage and the Information Age

Court Systems and Jurisdiction

Judicial, Alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Strict Liability and Product Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Internet Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Sales and Lease Warranties

Creation of Negotiable Instruments

Transferability and Holder In Due Course

Liability,Defenses and Discharge

Checks, the Banking System, and E-Money

Creditor's and Debtor's Rights

Secured Transactions and Electronic Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment,Worker Protection,and Immigration Laws

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Businesses, Entrepreneurs, and General Partnerships

Limited Partnerships and Limited Liability Limited Partnerships

Corporate Governance and the Sarbanes Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Business

Investor Protection and Online Securities Transactions

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection and Global Warming

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord Tenant Law and Land Use Regulation

Insurance

Accountants' Liability

Wills, Trusts, and Elder Law

Family Law

International and World Trade Law

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