Question 1

Owners of which of the following types of stock enjoy preferences with respect to assets and dividends?

Accepted Answer

A)   Acknowledged
B)   Preferred
C)   Simple
D)   Complex
E)   CommonF) A) and C)
G) B) and E)

Question 2

Corporations have only those powers that states grant them.

Accepted Answer

A) True 
 B)False

Question 3

Corporations have implied powers.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true regarding corporate structure in Germany?

Accepted Answer

A)   Germany has three tiers of corporate power with the board at the lowest tier, management on the second tier, and the supervisory board on the top tier.
B)   Germany has three tiers of corporate power with the board at the lowest tier, the supervisory board on the second tier, and management on the top tier.
C)   Germany has three tiers of corporate power with management at the lowest tier, the board on the second tier, and the supervisory board on the top tier.
D)   Germany has three tiers of corporate power with management at the lowest tier, the supervisory board on the second tier, and the board on the top tier.
E)   Germany has three tiers of corporate power with the supervisory board at the lowest tier, management on the second tier, and the board on the top tier.F) None of the above
G) B) and E)

Question 5

Which of the following is the likely result of Helen's attempt to hold the shareholders primarily liable for her debt?

Accepted Answer

A)   She will likely be successful.
B)   She will be successful only if ABC Corporation proceeds to file for bankruptcy protection.
C)   She will be successful only if ABC Corporation is insolvent and remains so for at least six months.
D)   She will be successful only if ABC Corporation is insolvent and remains so for at least one year.
E)   She will likely be unsuccessful.F) A) and E)
G) C) and E)

Question 6

Through which of the following do corporations distribute their income to shareholders?

Accepted Answer

A)   Allocations
B)   Grants
C)   Dividends
D)   Provisions
E)   AllowancesF) A) and D)
G) C) and D)

Question 7

Which of the following describes the friends who agreed to buy stock?

Accepted Answer

A)   Promoters
B)   Subscribers
C)   Novators
D)   Subscriptioners
E)   AcceptorsF) B) and C)
G) A) and D)

Question 8

Which of the following adopts corporate bylaws?

Accepted Answer

A)   Directors
B)   Shareholders
C)   Officers
D)   Incorporators
E)   PromotersF) All of the above
G) A) and B)

Question 9

Which of the following is the most likely result if Belinda sues Martha,Greg,and Prudence for unpaid amounts without a novation in place?

Accepted Answer

A)   Belinda would likely win because courts generally hold promoters liable and rule that preincorporation contracts do not bind the new corporation.
B)   Belinda would likely win unless it can be established that the new corporation is making a profit and is able to pay her.
C)   Belinda would likely win unless it can be established that the new corporation was capitalized with at least $100,000 and is able to pay her.
D)   Martha, Greg, and Prudence will win so long as they can prove that Belinda knew that the feed was purchased for a new corporation and not for their personal farm use.
E)   Martha, Greg, and Prudence will win unless they have already paid partial amounts leading Belinda to expect that they, not the corporation, had accepted liability.F) B) and C)
G) A) and E)

Question 10

Discuss the rights of corporations,if any,to due process.Also discuss whether corporations have protection with regard to the Fourth Amendment,and in what manner.

Accepted Answer

Courts have ruled that corporations are ...

Question 11

Which of the following is false regarding promoters?

Accepted Answer

A)   Promoters prepare the corporation's incorporation papers.
B)   Promoters raise capital for the infant corporation.
C)   Promoters can purchase buildings for the corporation.
D)   Promoters are agents for the company being formed.
E)   A promoter may insert a clause into a contract with a supplier stating that the corporation's adoption of the contract terminates the liability of the promoter.F) A) and B)
G) A) and C)

Question 12

No shareholder of an S corporation may be a nonresident alien.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true regarding the concerns of Jack and Bobby regarding double taxation and Mona's suggestion regarding an S corporation?

Accepted Answer

A)   Mona's suggestion will not solve the issue of double taxation because with both a regular corporation and with an S corporation, the corporation is taxed on income and shareholders are taxed again on dividends they receive.
B)   Jack and Bobby are incorrect, and an S corporation is not needed for any double taxation issue because with both a general corporation and an S corporation, tax effects would be the same with the corporation being taxed on earnings and shareholders being taxed again on dividends.
C)   Mona is correct that S corporation shareholders report their income from the corporation only once, as personal income.
D)   Mona is correct in that double taxation may be avoided through the use of an S corporation, but this can be negated through taxation of dividends at the higher corporate rate regardless of the tax rate of the shareholder.
E)   Mona is correct that double taxation may be avoided through the use of an S corporation, but this may be negated by the fact that S corporations are taxed at a rate double that of general corporations.F) A) and D)
G) C) and D)

Question 14

Corporate ______ are rules and regulations that govern the corporation's internal management.

Accepted Answer

A)   Bylaws
B)   Requirements
C)   Statutes
D)   Authorizations
E)   ProhibitionsF) B) and C)
G) A) and B)

Question 15

Which of the following is another name for debt securities?

Accepted Answer

A)   Stocks
B)   Bonds
C)   Certificates of deposit
D)   Equity securities
E)   Preferred debtF) B) and E)
G) C) and D)

Question 16

Which of the following is a term used to identify Martha,Greg,and Prudence in their arranging for necessary capital and financing for the corporation?

Accepted Answer

A)   Promoters
B)   Subscribers
C)   Novators
D)   Subscriptioners
E)   AcceptorsF) D) and E)
G) A) and B)

Question 17

List the two implied corporate powers set forth in the text.

Accepted Answer

Following are implied powers of a corpor...

Question 18

Private persons create ______ corporations for private purposes.

Accepted Answer

A)   Public
B)   Private
C)   Closely held
D)   Domestic
E)   Publicly heldF) D) and E)
G) C) and D)

Question 19

Which of the following is a corporation that has not substantially met the requirements of the state incorporation statute,but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who believed it was properly incorporated?

Accepted Answer

A)   A de jure corporation
B)   A de facto corporation
C)   A corporation by estoppel
D)   A corporation by reservation
E)   An inactive corporationF) A) and E)
G) C) and D)

Question 20

A court may hold that a defective corporation is a[n] ______ in order to prevent it from claiming it is not a corporate entity in order to escape liability to a third party.

Accepted Answer

A)   De jure corporation
B)   De facto corporation
C)   Corporation by estoppel
D)   Corporation by reservation
E)   Inactive corporationF) B) and C)
G) A) and B)

Exam 38: Corporations: Formation and Financing

A court may hold that a defective corporation is a[n] ______ in order to prevent it from claiming it is not a corporate entity in order to escape liability to a third party.

Correct AnswerverifiedShow Answer

List the two implied corporate powers set forth in the text.

Correct AnswerverifiedFollowing are implied powers of a corpor...View AnswerShow Answer

Which of the following is false regarding promoters?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the concerns of Jack and Bobby regarding double taxation and Mona's suggestion regarding an S corporation?

Correct AnswerverifiedShow Answer

Corporations have only those powers that states grant them.

Correct AnswerverifiedShow Answer

Discuss the rights of corporations,if any,to due process.Also discuss whether corporations have protection with regard to the Fourth Amendment,and in what manner.

Correct AnswerverifiedCourts have ruled that corporations are ...View AnswerShow Answer

Which of the following is true regarding corporate structure in Germany?

Correct AnswerverifiedShow Answer

Which of the following is the likely result of Helen's attempt to hold the shareholders primarily liable for her debt?

Correct AnswerverifiedShow Answer

Private persons create ______ corporations for private purposes.

Correct AnswerverifiedShow Answer

Through which of the following do corporations distribute their income to shareholders?

Correct AnswerverifiedShow Answer

Which of the following is a corporation that has not substantially met the requirements of the state incorporation statute,but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who believed it was properly incorporated?

Correct AnswerverifiedShow Answer

Corporations have implied powers.

Correct AnswerverifiedShow Answer

Which of the following describes the friends who agreed to buy stock?

Correct AnswerverifiedShow Answer

No shareholder of an S corporation may be a nonresident alien.

Correct AnswerverifiedShow Answer

Owners of which of the following types of stock enjoy preferences with respect to assets and dividends?

Correct AnswerverifiedShow Answer

Which of the following adopts corporate bylaws?

Correct AnswerverifiedShow Answer

Which of the following is the most likely result if Belinda sues Martha,Greg,and Prudence for unpaid amounts without a novation in place?

Correct AnswerverifiedShow Answer

Which of the following is a term used to identify Martha,Greg,and Prudence in their arranging for necessary capital and financing for the corporation?

Correct AnswerverifiedShow Answer

Corporate ______ are rules and regulations that govern the corporation's internal management.

Correct AnswerverifiedShow Answer

Which of the following is another name for debt securities?

Correct AnswerverifiedShow Answer

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Following are implied powers of a corpor...
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Courts have ruled that corporations are ...
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