Question 1

A corporation that does business in the state in which it was created is called a(n): ______.

Accepted Answer

A)  domestic corporation. 
B)  foreign corporation. 
C)  alien corporation. 
D)  home corporation. 
A)  domestic corporation. 
B)  foreign corporation. 
C)  alien corporation. 
D)  home corporation. A

Question 2

Bylaws that conflict with state law are valid, but unenforceable.

Accepted Answer

A) True 
 B)False  False

Question 3

A corporation is a legal person created by governmental action.

Accepted Answer

A) True 
 B)False  True

Question 4

Shareholders are absolutely immune from corporate liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a correct statement concerning the incorporation process?

Accepted Answer

A)  Each application for incorporation is reviewed by the appropriate state legislature. 
B)  The incorporation process is essentially a matter of filing the correct papers and fees with the designated government official. 
C)  Most applications for incorporation are rejected. 
D)  Incorporator(s) are never required to give public notice of the intent to form a corporation. 
A)  Each application for incorporation is reviewed by the appropriate state legislature. 
B)  The incorporation process is essentially a matter of filing the correct papers and fees with the designated government official. 
C)  Most applications for incorporation are rejected. 
D)  Incorporator(s) are never required to give public notice of the intent to form a corporation.

Question 6

When two corporations merge: ______.

Accepted Answer

A)  their separate existences cease, and a new corporation is formed. 
B)  one of the corporations absorbs the other. 
C)  each corporation's stockholders keep their original shares of stock 
D)  a new charter is needed. 
A)  their separate existences cease, and a new corporation is formed. 
B)  one of the corporations absorbs the other. 
C)  each corporation's stockholders keep their original shares of stock 
D)  a new charter is needed.

Question 7

A corporation may properly exist without a name.

Accepted Answer

A) True 
 B)False

Question 8

_________ of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders.

Accepted Answer

A)  Bankruptcy 
B)  Consolidation 
C)  Reinstatement 
D)  Judicial dissolution 
A)  Bankruptcy 
B)  Consolidation 
C)  Reinstatement 
D)  Judicial dissolution

Question 9

A corporation is ______ on a contract made by its ______ for its benefit unless the corporation accepts the contract's benefits.

Accepted Answer

A)  liable, promoters 
B)  not liable, promoters. 
C)  not liable, CEO. 
D)  ultra vires, promoters. 
A)  liable, promoters 
B)  not liable, promoters. 
C)  not liable, CEO. 
D)  ultra vires, promoters.

Question 10

A nonprofit corporation can include all the following except: ______.

Accepted Answer

A)  Eleemosynary corporations. 
B)  Charitable or benevolent purposes. 
C)  Hospitals and universities. 
D)  Benefit corporations. 
A)  Eleemosynary corporations. 
B)  Charitable or benevolent purposes. 
C)  Hospitals and universities. 
D)  Benefit corporations.

Question 11

A corporation may be judicially dissolved when its management is deadlocked and the deadlock cannot be broken by the shareholders.

Accepted Answer

A) True 
 B)False

Question 12

A corporation may exercise its power to borrow money by issuing bonds.

Accepted Answer

A) True 
 B)False

Question 13

Bylaws are typically adopted by the shareholders of a corporation and must be filed with the Secretary of State.

Accepted Answer

A) True 
 B)False

Question 14

In a merger situation, what is the right of a dissenting shareholder?

Accepted Answer

A)  to block the merger until satisfied regarding its terms. 
B)  to have their shares appraised and purchased by the corporation. 
C)  to enforce a consolidation instead of a merger. 
D)  dissenting shareholders have no rights with respect to a merger. 
A)  to block the merger until satisfied regarding its terms. 
B)  to have their shares appraised and purchased by the corporation. 
C)  to enforce a consolidation instead of a merger. 
D)  dissenting shareholders have no rights with respect to a merger.

Question 15

A holder of a single share of stock who objects to a merger has the power to stop the merger.

Accepted Answer

A) True 
 B)False

Question 16

If two firms consolidate, the new corporation usually succeeds to the rights, powers and immunities of its component parts.

Accepted Answer

A) True 
 B)False

Question 17

Because ______ corporations have a more restricted range of powers than business corporations, actions not authorized by their corporate charters are more likely to be found ______.

Accepted Answer

A)  nonprofit, ultra vires. 
B)  subchapter S, illegal. 
C)  a benefit, ultra vires 
D)  professional, illegal. 
A)  nonprofit, ultra vires. 
B)  subchapter S, illegal. 
C)  a benefit, ultra vires 
D)  professional, illegal.

Question 18

A successor enterprise is not subject to the contract obligations of the former business if: ______.

Accepted Answer

A)  one corporation is absorbed by another through merger. 
B)  a corporation merely purchases the assets of another business. 
C)  two or more corporations consolidate. 
D)  there is a merger by estoppel. 
A)  one corporation is absorbed by another through merger. 
B)  a corporation merely purchases the assets of another business. 
C)  two or more corporations consolidate. 
D)  there is a merger by estoppel.

Question 19

An enterprise that conducts business following a merger or consolidation succeeds to all of the following except: ______.

Accepted Answer

A)  all of the rights of the predecessor. 
B)  all of the property of the predecessor. 
C)  all of the debts and liabilities of the predecessor. 
D)  all of the management team of the predecessor. 
A)  all of the rights of the predecessor. 
B)  all of the property of the predecessor. 
C)  all of the debts and liabilities of the predecessor. 
D)  all of the management team of the predecessor.

Question 20

Where a corporation is properly formed, it is called a corporation: ______.

Accepted Answer

A)  di giorno. 
B)  de facto. 
C)  de jure. 
D)  by estoppel. 
A)  di giorno. 
B)  de facto. 
C)  de jure. 
D)  by estoppel.

Exam 43: Corporate Formation

A corporation that does business in the state in which it was created is called a(n): ______.

Bylaws that conflict with state law are valid, but unenforceable.

A corporation is a legal person created by governmental action.

Shareholders are absolutely immune from corporate liabilities.

Which of the following is a correct statement concerning the incorporation process?

When two corporations merge: ______.

A corporation may properly exist without a name.

_________ of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders.

A corporation is ______ on a contract made by its ______ for its benefit unless the corporation accepts the contract's benefits.

A nonprofit corporation can include all the following except: ______.

A corporation may be judicially dissolved when its management is deadlocked and the deadlock cannot be broken by the shareholders.

A corporation may exercise its power to borrow money by issuing bonds.

Bylaws are typically adopted by the shareholders of a corporation and must be filed with the Secretary of State.

In a merger situation, what is the right of a dissenting shareholder?

A holder of a single share of stock who objects to a merger has the power to stop the merger.

If two firms consolidate, the new corporation usually succeeds to the rights, powers and immunities of its component parts.

Because ______ corporations have a more restricted range of powers than business corporations, actions not authorized by their corporate charters are more likely to be found ______.

A successor enterprise is not subject to the contract obligations of the former business if: ______.

An enterprise that conducts business following a merger or consolidation succeeds to all of the following except: ______.

Where a corporation is properly formed, it is called a corporation: ______.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

Filters

A corporation is on a contract made by its for its benefit unless the corporation accepts the contract's benefits.

Because corporations have a more restricted range of powers than business corporations, actions not authorized by their corporate charters are more likely to be found .