Exam 7: Preparing the Proper Ethical and Legal Foundation

Most C corporations have two classes of stock- ________ and ________.

The major difference between a general and a limited partnership is that a limited partnership includes two classes of owners-general and limited partners.

________ stock is typically issued to conservative investors who have preferential rights over common stockholders in regard to dividends and to the assets of the corporation in the event of liquidation.

The ________ is a form of business organization that is rapidly gaining popularity in the United States. The concept originated in Germany and was first introduced in the United States in the state of Wyoming.

"Don't be evil" is the corporate motto for ________.

Corporations that trade their stock on organized exchanges like the New York Stock Exchange and the NASDAQ are called ________ corporations.

The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.

Stock options are a special form of incentive compensation.

Steven Diaz just took a job with Harley Davidson. As part of his employment agreement, Harley Davidson required Steven to sign an agreement, which states that if he leaves Harley Davidson, he will not work for a firm that competes against Harley Davidson for at least two years. The agreement that Steven signed is called a ________ agreement.

It is usually easier for a corporation to raise investment capital than a sole proprietorship or a general partnership because the shareholders are not liable beyond their investment in the firm.

A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.

Which of the following statements is incorrect regarding common stock?

A ________ sets forth the rights and duties of the general and limited partners, along with the details of how the partnership will be managed and eventually dissolved.

Corporations are organized as either C corporations, T corporations, or subchapter S corporations.

A(n) ________ is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founder will have to remain with the firm for their shares to fully vest.

A disadvantage of a sole proprietorship is that it is subject to double taxation.

The most important thing that any entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization is to hire an aggressive attorney.

If the owners of a corporation don't file their annual paperwork, neglect to pay their annual fees, or commit fraud, a court could ignore the fact that a corporation has been established and the owners could be held personally liable for the actions of the corporation. This chain of events is referred to as ________.

Corporations are organized as either ________ corporations or ________ corporations.

What is meant by the term "piercing the corporate veil"? How can the corporate veil be pierced?