Question 1

A Subchapter S corporation is typically treated like a ________ for federal income tax purposes.

Accepted Answer

A) for-profit corporation 
B) partnership 
C) publicly held corporation 
D) not-for-profit corporation 
A) for-profit corporation 
B) partnership 
C) publicly held corporation 
D) not-for-profit corporation

Question 2

According to the Supreme Court of the United States,a foreign corporation may be brought into a state's court in connection with its activities within the state,provided that the state does not violate the corporation's due process rights under the Fourteenth Amendment of the Constitution and its rights under the:

Accepted Answer

A) Foreign Business Clause. 
B) Domestic Business Clause. 
C) Commerce Clause. 
D) Doing Business Clause. 
A) Foreign Business Clause. 
B) Domestic Business Clause. 
C) Commerce Clause. 
D) Doing Business Clause.

Question 3

It is possible to create a corporation without a government's permission.

Accepted Answer

A) True 
 B)False

Question 4

What is the term for when a shareholder causes a corporation to act to the benefit of an individual shareholder?

Accepted Answer

A) Estoppel 
B) Domination 
C) Submission 
D) Incorporation 
A) Estoppel 
B) Domination 
C) Submission 
D) Incorporation

Question 5

Which of the following describes when a corporation pays income tax on its profits,and when the corporation distributes the after-tax profits as dividends,the shareholders may tax on the dividends?

Accepted Answer

A) Shareholder taxation 
B) International double taxation 
C) Federal income taxation 
D) Double taxation 
A) Shareholder taxation 
B) International double taxation 
C) Federal income taxation 
D) Double taxation

Question 6

Incorporating a business involves following state law.

Accepted Answer

A) True 
 B)False

Question 7

Which class of corporation has members rather than shareholders?

Accepted Answer

A) S corporation 
B) For-profit corporation 
C) Publicly held corporation 
D) Not-for-profit corporation 
A) S corporation 
B) For-profit corporation 
C) Publicly held corporation 
D) Not-for-profit corporation

Question 8

Jim created a shoe-manufacturing corporation by contributing $1,000.He stayed as the sole shareholder and director of the corporation.To inject further capital into the corporation,he loaned the corporation $100,000 and secured the loan in exchange for all the corporation's assets.Five years into operations,the corporation has still failed to make profits and consequently filed for bankruptcy.Who has been defrauded?

Accepted Answer

A) Ordinary shareholders 
B) Preferred shareholders 
C) Nonshareholder-creditors 
D) Board of directors 
A) Ordinary shareholders 
B) Preferred shareholders 
C) Nonshareholder-creditors 
D) Board of directors

Question 9

Tennessee-Alabama Fireworks Company (TAF)is incorporated in Tennessee.It maintains year-round retail stores in Tennessee and Alabama.It also sells fireworks to individual consumers at a gas station parking lot in Indiana for a period of 20 days before the Fourth of July.Must TAF qualify to do business in Indiana?

Accepted Answer

Yes.This does not meet the iso

Question 10

Mary Lee James,a certified public accountant in Edgewater,Florida,wishes to incorporate.According to the corporate law requirements,she needs to incorporate under the:

Accepted Answer

A) common corporation law. 
B) professional corporation acts. 
C) special professional charter. 
D) general incorporation law. 
A) common corporation law. 
B) professional corporation acts. 
C) special professional charter. 
D) general incorporation law.

Question 11

There is a similar set of legal rules that applies to both foreign and alien corporations.

Accepted Answer

A) True 
 B)False

Question 12

A corporation that is incorporated in one state and doing business in another state is called a(n):

Accepted Answer

A) alien corporation 
B) domestic corporation 
C) international corporation 
D) foreign corporation 
A) alien corporation 
B) domestic corporation 
C) international corporation 
D) foreign corporation

Question 13

Which of the following is not a consideration when determining whether a state law regulating the activities of a foreign corporation places an undue burden on interstate commerce?

Accepted Answer

A) Whether the law serves a legitimate state interest. 
B) Whether the state has chosen the least burdensome means. 
C) Whether the state's law is the most economical solution to the problem. 
D) Whether the state's reasoning outweighs the statute's burden on interstate commerce. 
A) Whether the law serves a legitimate state interest. 
B) Whether the state has chosen the least burdensome means. 
C) Whether the state's law is the most economical solution to the problem. 
D) Whether the state's reasoning outweighs the statute's burden on interstate commerce.

Question 14

Toywood Inc. ,headquartered in Vermont,specializes in manufacturing non-toxic wooden toys in its two mechanized units in Vermont and New Hampshire.Its flagship store is located in Philadelphia,Pennsylvania.It will be considered a(n)________ corporation in Pennsylvania.

Accepted Answer

A) domestic 
B) alien 
C) domicile 
D) foreign 
A) domestic 
B) alien 
C) domicile 
D) foreign

Question 15

________ have shares generally available to the public and tend to be managed by professional managers who own small percentages of the corporation.

Accepted Answer

A) All for-profit corporations 
B) Publicly held corporations 
C) S corporations 
D) Close corporations. 
A) All for-profit corporations 
B) Publicly held corporations 
C) S corporations 
D) Close corporations.

Question 16

Famous British trading companies were the forerunners of the modern corporation and primarily sought corporate status because the government granted them:

Accepted Answer

A) full dominion over natural resources. 
B) taxation powers. 
C) monopolies and governmental powers. 
D) immunity from civil and criminal liability. 
A) full dominion over natural resources. 
B) taxation powers. 
C) monopolies and governmental powers. 
D) immunity from civil and criminal liability.

Question 17

Forming a business with a high debt-to-equity ratio is an example of:

Accepted Answer

A) circumventing a statute. 
B) thin capitalization. 
C) creditor domination. 
D) looting. 
A) circumventing a statute. 
B) thin capitalization. 
C) creditor domination. 
D) looting.

Question 18

The mere presence of a Nevada corporation's vacant property in California is sufficient to subject the corporation to taxes in California.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is true about an S corporation?

Accepted Answer

A) It is taxed at both the corporate and shareholder levels. 
B) It may only have 500 or fewer shareholders. 
C) An S corporation election requires the consent of a majority of its shareholders. 
D) Shareholders of an S corporation may be only individuals or trusts. 
A) It is taxed at both the corporate and shareholder levels. 
B) It may only have 500 or fewer shareholders. 
C) An S corporation election requires the consent of a majority of its shareholders. 
D) Shareholders of an S corporation may be only individuals or trusts.

Question 20

Not-for-profit corporations are regulated primarily by the:

Accepted Answer

A) states. 
B) federal court. 
C) federal government. 
D) Supreme Court. 
A) states. 
B) federal court. 
C) federal government. 
D) Supreme Court.

Exam 41: History and Nature of Corporations

A Subchapter S corporation is typically treated like a ________ for federal income tax purposes.

It is possible to create a corporation without a government's permission.

What is the term for when a shareholder causes a corporation to act to the benefit of an individual shareholder?

Which of the following describes when a corporation pays income tax on its profits,and when the corporation distributes the after-tax profits as dividends,the shareholders may tax on the dividends?

Incorporating a business involves following state law.

Which class of corporation has members rather than shareholders?

Mary Lee James,a certified public accountant in Edgewater,Florida,wishes to incorporate.According to the corporate law requirements,she needs to incorporate under the:

There is a similar set of legal rules that applies to both foreign and alien corporations.

A corporation that is incorporated in one state and doing business in another state is called a(n):

Which of the following is not a consideration when determining whether a state law regulating the activities of a foreign corporation places an undue burden on interstate commerce?

Toywood Inc. ,headquartered in Vermont,specializes in manufacturing non-toxic wooden toys in its two mechanized units in Vermont and New Hampshire.Its flagship store is located in Philadelphia,Pennsylvania.It will be considered a(n)________ corporation in Pennsylvania.

________ have shares generally available to the public and tend to be managed by professional managers who own small percentages of the corporation.

Famous British trading companies were the forerunners of the modern corporation and primarily sought corporate status because the government granted them:

Forming a business with a high debt-to-equity ratio is an example of:

The mere presence of a Nevada corporation's vacant property in California is sufficient to subject the corporation to taxes in California.

Which of the following is true about an S corporation?

Not-for-profit corporations are regulated primarily by the:

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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