Question 1

Which of the following is the basic governing document of a corporation?

Accepted Answer

A)  A subscription. 
B)  A charter, after filing. 
C)  The set of bylaws. 
D)  A certificate of authority. 
A)  A subscription. 
B)  A charter, after filing. 
C)  The set of bylaws. 
D)  A certificate of authority.

Question 2

Courts have responded by piercing the veil when the shareholders have:

Accepted Answer

A)  not followed the formalities of corporate procedures. 
B)  not provided an adequate financial basis for the business. 
C)  used the corporation to defraud. 
D)  All of these. 
E)  Not followed the formalities of corporate procedures or  used the corporation to defraud. 
A)  not followed the formalities of corporate procedures. 
B)  not provided an adequate financial basis for the business. 
C)  used the corporation to defraud. 
D)  All of these. 
E)  Not followed the formalities of corporate procedures or  used the corporation to defraud.

Question 3

Which of the following may be used to redress the ultra vires acts committed by a corporation?

Accepted Answer

A)  Proceeding by shareholders for an injunction. 
B)  Suit by the corporation or shareholders derivatively against present or former directors or officers for commission of the acts. 
C)  A proceeding by the attorney general of the state of incorporation to enjoin it from the transaction of unauthorized business. 
D)  All of these may be used. 
A)  Proceeding by shareholders for an injunction. 
B)  Suit by the corporation or shareholders derivatively against present or former directors or officers for commission of the acts. 
C)  A proceeding by the attorney general of the state of incorporation to enjoin it from the transaction of unauthorized business. 
D)  All of these may be used.

Question 4

The RMBCA has been adopted, in whole or in part, by most states.

Accepted Answer

A) True 
 B)False

Question 5

Under the RMBCA, the charter of the corporation is required to provide all of the following EXCEPT:

Accepted Answer

A)  the number of shares authorized. 
B)  the street address of the registered office. 
C)  names of the initial directors. 
D)  the name and address of each incorporator. 
A)  the number of shares authorized. 
B)  the street address of the registered office. 
C)  names of the initial directors. 
D)  the name and address of each incorporator.

Question 6

Title to corporate property belongs to the shareholders.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a characteristic of the corporate form of doing business?

Accepted Answer

A)  Limited liability. 
B)  Perpetual existence. 
C)  Informal organization. 
D)  Transferability of corporate shares. 
A)  Limited liability. 
B)  Perpetual existence. 
C)  Informal organization. 
D)  Transferability of corporate shares.

Question 8

Under the Revised Act, a corporation can act as an incorporator of another corporation.

Accepted Answer

A) True 
 B)False

Question 9

Under which of the following provisions of the U.S. Constitution is a corporation not a "person"?

Accepted Answer

A)  The Fifth Amendment Due Process Clause. 
B)  The Fourteenth Amendment Due Process Clause. 
C)  The Fourteenth Amendment Equal Protection Clause. 
D)  The Fifth Amendment right against self-incrimination. 
E)  The Fourth Amendment protection against unreasonable searches and seizures. 
A)  The Fifth Amendment Due Process Clause. 
B)  The Fourteenth Amendment Due Process Clause. 
C)  The Fourteenth Amendment Equal Protection Clause. 
D)  The Fifth Amendment right against self-incrimination. 
E)  The Fourth Amendment protection against unreasonable searches and seizures.

Question 10

Corporate powers granted by the RMBCA include all but which of the following?

Accepted Answer

A)  To establish profit-sharing plans and other employee benefit plans. 
B)  To make charitable donations. 
C)  To be considered a person under the Fourth Amendment's search and seizures clause and the Fifth Amendment's self-incrimination clause. 
D)  To borrow and lend money. 
A)  To establish profit-sharing plans and other employee benefit plans. 
B)  To make charitable donations. 
C)  To be considered a person under the Fourth Amendment's search and seizures clause and the Fifth Amendment's self-incrimination clause. 
D)  To borrow and lend money.

Question 11

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Accepted Answer

A) True 
 B)False

Question 12

The "corporate veil" is most likely to be pierced in the case of closely held corporations and in parent-subsidiary relationships.

Accepted Answer

A) True 
 B)False

Question 13

The doctrine of ultra vires is of more significance today than it has been in the past.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is untrue regarding closely held corporations?

Accepted Answer

A)  Most corporations in the U.S. are closely held. 
B)  Shareholders frequently restrict the transfer of shares to prevent "outsiders" from obtaining the stock. 
C)  Shareholders usually have little voice in the management and control of the business. 
D)  Some states have enacted special legislation to accommodate the needs of closely held corporations. 
A)  Most corporations in the U.S. are closely held. 
B)  Shareholders frequently restrict the transfer of shares to prevent "outsiders" from obtaining the stock. 
C)  Shareholders usually have little voice in the management and control of the business. 
D)  Some states have enacted special legislation to accommodate the needs of closely held corporations.

Question 15

In many states, the services of the incorporators are perfunctory and short-lived.

Accepted Answer

A) True 
 B)False

Question 16

Define "promoter" in reference to a corporation.

Accepted Answer

A promoter is a person who brings about

Question 17

Mark complied with all formation requirements for incorporating his taxicab business. He is the sole shareholder in the corporation. The corporation owns two automobiles that Mark frequently uses for his own personal use. In addition, he sometimes deposits the money he takes in during the day into his personal checking account. One day, an employee of the company, while driving one of the company vehicles, accidentally hits a pedestrian in a crosswalk. The pedestrian sues both Mark and the taxi company for $100,000. The corporate assets are only $32,000. Is the corporation liable for the acts of its employee? Will Mark be personally liable under the facts? Explain.

Accepted Answer

Since the formalities of creating a corp

Question 18

A corporation formed in substantial compliance with the incorporation statute and the required organizational procedures is a:

Accepted Answer

A)  de facto corporation. 
B)  de jure corporation. 
C)  corporation by estoppel. 
D)  private corporation. 
A)  de facto corporation. 
B)  de jure corporation. 
C)  corporation by estoppel. 
D)  private corporation.

Question 19

Shareholders do not have limited liability for corporate debts.

Accepted Answer

A) True 
 B)False

Question 20

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Accepted Answer

A) True 
 B)False

Exam 33: Nature and Formation of Corporations

Which of the following is the basic governing document of a corporation?

Courts have responded by piercing the veil when the shareholders have:

Which of the following may be used to redress the ultra vires acts committed by a corporation?

The RMBCA has been adopted, in whole or in part, by most states.

Under the RMBCA, the charter of the corporation is required to provide all of the following EXCEPT:

Title to corporate property belongs to the shareholders.

Which of the following is NOT a characteristic of the corporate form of doing business?

Under the Revised Act, a corporation can act as an incorporator of another corporation.

Under which of the following provisions of the U.S. Constitution is a corporation not a "person"?

Corporate powers granted by the RMBCA include all but which of the following?

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

The "corporate veil" is most likely to be pierced in the case of closely held corporations and in parent-subsidiary relationships.

The doctrine of ultra vires is of more significance today than it has been in the past.

Which of the following is untrue regarding closely held corporations?

In many states, the services of the incorporators are perfunctory and short-lived.

Define "promoter" in reference to a corporation.

A corporation formed in substantial compliance with the incorporation statute and the required organizational procedures is a:

Shareholders do not have limited liability for corporate debts.

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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