Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Identify and give the basic characteristics of each of the following specialized types of corporations.
a.Professional
b.Public corporations
c.Non-profit corporations

Accepted Answer

a.Used by doctors, dentists, lawyers, ac

Question 3

Which of the following is correct regarding the characteristics of a corporation?

Accepted Answer

A) A corporation is considered a person within the meaning of the Fourteenth Amendment's equal protection clause. 
B) The Fifth Amendment provisions against self-incrimination protect a corporation. 
C) A corporation is protected by the Fourth Amendment's provision against unreasonable searches and seizures. 
D) Two of the above, (a) and (c). 
A) A corporation is considered a person within the meaning of the Fourteenth Amendment's equal protection clause. 
B) The Fifth Amendment provisions against self-incrimination protect a corporation. 
C) A corporation is protected by the Fourth Amendment's provision against unreasonable searches and seizures. 
D) Two of the above, (a) and (c).

Question 4

All of the following are characteristics of a corporation EXCEPT:

Accepted Answer

A) it has perpetual existence. 
B) it is a legal entity of its own. 
C) it is able to be sued and to sue. 
D) it is usually managed by its owners. 
A) it has perpetual existence. 
B) it is a legal entity of its own. 
C) it is able to be sued and to sue. 
D) it is usually managed by its owners.

Question 5

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 6

A corporation's adoption of a promoter's preincorporation contract made in the name of the corporation usually releases the promoter from liability on the contract.

Accepted Answer

A) True 
 B)False

Question 7

What is a Subchapter S Corporation, and what are its requirements?

Accepted Answer

Subchapter S of the Internal Revenue Cod

Question 8

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 9

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 the above 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 the above may be used.

Question 10

A corporation is considered a citizen:

Accepted Answer

A) of the state in which it has its principal office, for the purpose of determining diversity of citizenship. 
B) of the state of its incorporation, for the purpose of determining diversity of citizenship. 
C) under the Fourteenth Amendment privileges and immunities clause. 
D) All of the above. 
E) Only (a) and (b). 
A) of the state in which it has its principal office, for the purpose of determining diversity of citizenship. 
B) of the state of its incorporation, for the purpose of determining diversity of citizenship. 
C) under the Fourteenth Amendment privileges and immunities clause. 
D) All of the above. 
E) Only (a) and (b).

Question 11

What are the principal attributes of a corporation?

Accepted Answer

(a) It is a legal entity.
(b) It owes it

Question 12

Shareholders do not have limited liability for corporate debts.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a requirement of a Subchapter S corporation?

Accepted Answer

A) It must be a domestic corporation. 
B) It must have no more than 50 shareholders. 
C) A corporation or partnership cannot be a shareholder. 
D) It may have only one class of stock. 
A) It must be a domestic corporation. 
B) It must have no more than 50 shareholders. 
C) A corporation or partnership cannot be a shareholder. 
D) It may have only one class of stock.

Question 14

A corporation owned by one person is treated under the law as separate from that person.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not usually be found in the articles of incorporation of a corporation?

Accepted Answer

A) The number of directors necessary for a quorum. 
B) The name and address of the corporation. 
C) Address of each incorporator. 
D) The number of authorized shares. 
A) The number of directors necessary for a quorum. 
B) The name and address of the corporation. 
C) Address of each incorporator. 
D) The number of authorized shares.

Question 16

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 the above. 
E) (a) and (c) only. 
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 the above. 
E) (a) and (c) only.

Question 17

Use of "Evans & Hall, Ltd." as a corporate name would be:

Accepted Answer

A) permissible as long as it is distinguishable from the name of any domestic corporation or any foreign corporation authorized to do business within the state. 
B) impermissible because it does not clearly designate that the organization is a corporation. 
C) impermissible because it includes surnames. 
D) permissible because the selection of a corporate name is purely up to the organizers of the corporation. 
A) permissible as long as it is distinguishable from the name of any domestic corporation or any foreign corporation authorized to do business within the state. 
B) impermissible because it does not clearly designate that the organization is a corporation. 
C) impermissible because it includes surnames. 
D) permissible because the selection of a corporate name is purely up to the organizers of the corporation.

Question 18

Bylaws are rules governing a corporation's internal management.

Accepted Answer

A) True 
 B)False

Question 19

Claire opened Claire's Beauty Parlor in her home.She solicited funds to begin the business from Jack, who believed that the business was incorporated.Claire had, in fact, never filed the papers.One day, Claire fell asleep while giving a customer a permanent and the solution caused her customer severe burns.The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets.Under the Revised Model Act, what would be the result?

Accepted Answer

A) Claire and Jack would not be personally liable. 
B) Claire would not be personally liable, but Jack would. 
C) Jack would not be personally liable, but Claire would. 
D) Both would be personally liable since there was no corporation formed. 
A) Claire and Jack would not be personally liable. 
B) Claire would not be personally liable, but Jack would. 
C) Jack would not be personally liable, but Claire would. 
D) Both would be personally liable since there was no corporation formed.

Question 20

Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation to avoid a personal liability.A court's disregarding the corporate entity and holding Bonney personally liable is called:

Accepted Answer

A) limited liability. 
B) ultra vires. 
C) diversity of interest. 
D) piercing the corporate veil. 
A) limited liability. 
B) ultra vires. 
C) diversity of interest. 
D) piercing the corporate veil.

Exam 34: Nature and Formation of Corporations

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

Identify and give the basic characteristics of each of the following specialized types of corporations. a.Professional b.Public corporations c.Non-profit corporations

Which of the following is correct regarding the characteristics of a corporation?

All of the following are characteristics of a corporation EXCEPT:

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

A corporation's adoption of a promoter's preincorporation contract made in the name of the corporation usually releases the promoter from liability on the contract.

What is a Subchapter S Corporation, and what are its requirements?

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

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

A corporation is considered a citizen:

What are the principal attributes of a corporation?

Shareholders do not have limited liability for corporate debts.

Which of the following is not a requirement of a Subchapter S corporation?

A corporation owned by one person is treated under the law as separate from that person.

Which of the following would not usually be found in the articles of incorporation of a corporation?

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

Use of "Evans & Hall, Ltd." as a corporate name would be:

Bylaws are rules governing a corporation's internal management.

Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation to avoid a personal liability.A court's disregarding the corporate entity and holding Bonney personally liable is called:

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

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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