Question 1

Corporate profits can be subject to double taxation.

Accepted Answer

A) True 
 B)False

Question 2

Skyla and Terry want to form and do business as Unique Boutique Corporation. Most statutes governing the formation and use of corporations are guided by

Accepted Answer

A)  city or county corporate codes. 
B)  the Entrepreneur's Corporate Handbook. 
C)  the federal Administrative Procedure Act. 
D)  the Revised Model Business Corporation Act. 
A)  city or county corporate codes. 
B)  the Entrepreneur's Corporate Handbook. 
C)  the federal Administrative Procedure Act. 
D)  the Revised Model Business Corporation Act.

Question 3

A corporation cannot be held liable for the criminal acts of its employees.

Accepted Answer

A) True 
 B)False

Question 4

Fact Pattern 39-1A
Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its timber operation. In the course of his employment, Niles disposes of the operation’s waste illegally. Orson is a Mountaintop shareholder.
-Refer to Fact Pattern 39-1A. With respect to Mountaintop and Niles, liability for this crime most likely rests with

Accepted Answer

A)  neither Mountaintop nor Niles. 
B)  Mountaintop and Niles. 
C)  Mountaintop only. 
D)  Niles only. 
A)  neither Mountaintop nor Niles. 
B)  Mountaintop and Niles. 
C)  Mountaintop only. 
D)  Niles only.

Question 5

Hailey and Ike hold the first organizational meeting of Java Kiosk Corporation. Probably the most important function of this meeting is

Accepted Answer

A)  adopting Java's bylaws. 
B)  agreeing on Java's purpose. 
C)  drafting Java's articles. 
D)  obtaining a charter for Java. 
A)  adopting Java's bylaws. 
B)  agreeing on Java's purpose. 
C)  drafting Java's articles. 
D)  obtaining a charter for Java.

Question 6

Ivy and Justin want to form and do business as Kayak Adventures Corporation. A corporation can be owned by

Accepted Answer

A)  natural persons only. 
B)  artificial persons only. 
C)  artificial or natural persons. 
D)  neither "artificial" nor "natural" persons. 
A)  natural persons only. 
B)  artificial persons only. 
C)  artificial or natural persons. 
D)  neither "artificial" nor "natural" persons.

Question 7

A holding company is a company whose business activity consists of holding shares in another company.

Accepted Answer

A) True 
 B)False

Question 8

Quixotic Company claims to be a corporation but it is not. Rachel signs a contract with Quixotic that is not performed. In Rachel's suit against Quixotic, a court will likely recognize the firm as

Accepted Answer

A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  an ultra vires corporation. 
A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  an ultra vires corporation.

Question 9

Discount Factory Outlets, Inc., issues bonds. Bonds

Accepted Answer

A)  are issued by businesses only. 
B)  are sometimes referred to as "stock with preferences." 
C)  have maturity dates. 
D)  require periodic interest payments from their owners. 
A)  are issued by businesses only. 
B)  are sometimes referred to as "stock with preferences." 
C)  have maturity dates. 
D)  require periodic interest payments from their owners.

Question 10

Stan incorporates his scientific products business as Tech Precision Supply, Inc. This firm could have perpetual existence in

Accepted Answer

A)  a few states. 
B)  all states. 
C)  most states. 
D)  no states. 
A)  a few states. 
B)  all states. 
C)  most states. 
D)  no states.

Question 11

Wild & Scenic River Tours, Inc., is a corporation. Wild & Scenic has the implied power to

Accepted Answer

A)  issue stocks and bonds. 
B)  execute contracts and negotiable instruments. 
C)  buy and sell (or lease) property. 
D)  perform all acts reasonably appropriate and necessary to accomplish its corporate purposes. 
A)  issue stocks and bonds. 
B)  execute contracts and negotiable instruments. 
C)  buy and sell (or lease) property. 
D)  perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

Question 12

Digitech is a foreign corporation, which means that Digitech

Accepted Answer

A)  is an alien corporation. 
B)  is chartered in a foreign country. 
C)  may be required to obtain a certificate of authority to do business. 
D)  may do business only in foreign countries. 
A)  is an alien corporation. 
B)  is chartered in a foreign country. 
C)  may be required to obtain a certificate of authority to do business. 
D)  may do business only in foreign countries.

Question 13

Boutique Corporation would like to change its corporate status to avoid income taxes at the corporate level. To qualify, the shareholders must not be

Accepted Answer

A)  corporations. 
B)  estates. 
C)  individuals. 
D)  partnerships. 
A)  corporations. 
B)  estates. 
C)  individuals. 
D)  partnerships.

Question 14

Suki is a registered agent for Trans-state Trucking, Inc. (TTI), which incorporated in Utah. As a registered agent, Suki

Accepted Answer

A)  agreed to buy stock in TTI before it existed. 
B)  applied to Utah on behalf of TTI to obtain its corporate charter. 
C)  does business for TTI in Utah. 
D)  receives legal documents on behalf of TTI. 
A)  agreed to buy stock in TTI before it existed. 
B)  applied to Utah on behalf of TTI to obtain its corporate charter. 
C)  does business for TTI in Utah. 
D)  receives legal documents on behalf of TTI.

Question 15

Common stock provides a proportionate interest in the corporation with regard to control.

Accepted Answer

A) True 
 B)False

Question 16

Stocks represent the borrowing of funds by firms.

Accepted Answer

A) True 
 B)False

Question 17

An agreement between shareholders to restrict the transfer of a closely held corporation's stock is illegal.

Accepted Answer

A) True 
 B)False

Question 18

Sullivan and Taylor want to form a corporation to provide catering services. The first step in the incorporation procedure is to

Accepted Answer

A)  file the articles of incorporation. 
B)  hold the first organizational meeting. 
C)  secure a corporate name. 
D)  select a state in which to incorporate. 
A)  file the articles of incorporation. 
B)  hold the first organizational meeting. 
C)  secure a corporate name. 
D)  select a state in which to incorporate.

Question 19

A corporation whose shares are not publicly traded is a partnership.

Accepted Answer

A) True 
 B)False

Question 20

Start-Up Corporation substantially complies with all conditions precedent to incorporation. Start-Up has

Accepted Answer

A)  corporate existence by estoppel. 
B)  de facto existence. 
C)  de jure existence. 
D)  ultra vires existence. 
A)  corporate existence by estoppel. 
B)  de facto existence. 
C)  de jure existence. 
D)  ultra vires existence.

Exam 39: Corporate Formation and Financing

Corporate profits can be subject to double taxation.

Skyla and Terry want to form and do business as Unique Boutique Corporation. Most statutes governing the formation and use of corporations are guided by

A corporation cannot be held liable for the criminal acts of its employees.

Hailey and Ike hold the first organizational meeting of Java Kiosk Corporation. Probably the most important function of this meeting is

Ivy and Justin want to form and do business as Kayak Adventures Corporation. A corporation can be owned by

A holding company is a company whose business activity consists of holding shares in another company.

Quixotic Company claims to be a corporation but it is not. Rachel signs a contract with Quixotic that is not performed. In Rachel's suit against Quixotic, a court will likely recognize the firm as

Discount Factory Outlets, Inc., issues bonds. Bonds

Stan incorporates his scientific products business as Tech Precision Supply, Inc. This firm could have perpetual existence in

Wild & Scenic River Tours, Inc., is a corporation. Wild & Scenic has the implied power to

Digitech is a foreign corporation, which means that Digitech

Boutique Corporation would like to change its corporate status to avoid income taxes at the corporate level. To qualify, the shareholders must not be

Suki is a registered agent for Trans-state Trucking, Inc. (TTI), which incorporated in Utah. As a registered agent, Suki

Common stock provides a proportionate interest in the corporation with regard to control.

Stocks represent the borrowing of funds by firms.

An agreement between shareholders to restrict the transfer of a closely held corporation's stock is illegal.

Sullivan and Taylor want to form a corporation to provide catering services. The first step in the incorporation procedure is to

A corporation whose shares are not publicly traded is a partnership.

Start-Up Corporation substantially complies with all conditions precedent to incorporation. Start-Up has

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

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