Question 1

The ________ is the basic governing documents of a corporation that must be filed with the secretary of state of the state of incorporation.

Accepted Answer

A)  debt security 
B)  debenture 
C)  certificate of authority 
D)  articles of incorporation 
A)  debt security 
B)  debenture 
C)  certificate of authority 
D)  articles of incorporation

Question 2

Authorized shares that have been sold by a corporation are called unissued shares.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following has a fixed maturity date?

Accepted Answer

A)  bonds 
B)  common stock 
C)  cumulative preferred stock 
D)  participating preferred stock 
A)  bonds 
B)  common stock 
C)  cumulative preferred stock 
D)  participating preferred stock

Question 4

A corporation in the state in which it was formed is referred to as a(n)________ corporation.

Accepted Answer

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

Question 5

________ corporations are private corporations that are formed for charitable,educational,religious,or scientific purposes.

Accepted Answer

A)  Privately held 
B)  Publicly held 
C)  Service 
D)  Nonprofit 
A)  Privately held 
B)  Publicly held 
C)  Service 
D)  Nonprofit

Question 6

Profit corporations are private corporations that are created to conduct a business for profit and can distribute profits to shareholders in the form of dividends.

Accepted Answer

A) True 
 B)False

Question 7

________ is a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

Accepted Answer

A)  Limited-purpose clause 
B)  Limited liability of shareholders 
C)  Preferred shareholder rule 
D)  Nonparticipating shareholder rule 
A)  Limited-purpose clause 
B)  Limited liability of shareholders 
C)  Preferred shareholder rule 
D)  Nonparticipating shareholder rule

Question 8

The judicial dissolution of a corporation can be brought about if the corporation ________.

Accepted Answer

A)  has a board of directors elected by its shareholders 
B)  is incorporated in only one state 
C)  exceeded or abused the authority conferred on it by law 
D)  submitted its articles of incorporation with the secretary of state after it was voted for by its shareholders 
A)  has a board of directors elected by its shareholders 
B)  is incorporated in only one state 
C)  exceeded or abused the authority conferred on it by law 
D)  submitted its articles of incorporation with the secretary of state after it was voted for by its shareholders

Question 9

Redeemable preferred stock allows the preferred stockholders to convert their shares into common stock.

Accepted Answer

A) True 
 B)False

Question 10

How can a corporation incorporated in one state conduct interstate commerce?

Accepted Answer

A state can require a foreign corporatio

Question 11

Authorized shares that have not been sold by the corporation are known as ________ shares.

Accepted Answer

A)  issued 
B)  unissued 
C)  outstanding 
D)  liquidated 
A)  issued 
B)  unissued 
C)  outstanding 
D)  liquidated

Question 12

________ is a type of equity security that represents the residual value of a corporation.

Accepted Answer

A)  Common stock 
B)  Preferred stock 
C)  Cumulative preferred stock 
D)  Participating preferred stock 
A)  Common stock 
B)  Preferred stock 
C)  Cumulative preferred stock 
D)  Participating preferred stock

Question 13

No par value shares are common stock on which the corporation has set the lowest price at which the shares may be issued by the corporation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about corporations is true?

Accepted Answer

A)  The corporate officers appoint directors to run the corporation's day-to-day operations. 
B)  The death, insanity, or bankruptcy of a director or an officer of a corporation dissolves the corporation. 
C)  Corporations can be put in prison for violations of the law. 
D)  Corporations usually have a centralized management composed of the board of directors and officers of the corporation. 
A)  The corporate officers appoint directors to run the corporation's day-to-day operations. 
B)  The death, insanity, or bankruptcy of a director or an officer of a corporation dissolves the corporation. 
C)  Corporations can be put in prison for violations of the law. 
D)  Corporations usually have a centralized management composed of the board of directors and officers of the corporation.

Question 15

A registered agent is a person or corporation that is empowered to accept service of process on behalf of a corporation.

Accepted Answer

A) True 
 B)False

Question 16

Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Accepted Answer

A)  cumulative preferred stocks 
B)  noncumulative preferred stocks 
C)  common stocks 
D)  participating preferred stock 
A)  cumulative preferred stocks 
B)  noncumulative preferred stocks 
C)  common stocks 
D)  participating preferred stock

Question 17

Explain how the Delaware courts provide assurance to Delaware corporations in trying to decide their liability toward sues.

Accepted Answer

Delaware has a special court-the court o

Question 18

Which of the following is true for a corporation's liability on the promoters' contracts if the corporation is never formed?

Accepted Answer

A)  The corporation assumes liability of the promoters' contract automatically upon its creation. 
B)  The promoter's liabilities are transferred to the board of directors of the corporation upon its formation. 
C)  The promoter, corporation, and the third-party enter into a novation whereby liability is solely transferred to the corporation. 
D)  The promoters have joint personal liability on the contract unless the third party specifically exempts them from such liability. 
A)  The corporation assumes liability of the promoters' contract automatically upon its creation. 
B)  The promoter's liabilities are transferred to the board of directors of the corporation upon its formation. 
C)  The promoter, corporation, and the third-party enter into a novation whereby liability is solely transferred to the corporation. 
D)  The promoters have joint personal liability on the contract unless the third party specifically exempts them from such liability.

Question 19

Which of the following must be included in an article of incorporation?

Accepted Answer

A)  The minutes of the first organizational meeting of the board of directors. 
B)  The number of shares the corporation is authorized to issue. 
C)  The dissolution terms of the incorporation. 
D)  The corporate seal must be used in the articles of incorporation. 
A)  The minutes of the first organizational meeting of the board of directors. 
B)  The number of shares the corporation is authorized to issue. 
C)  The dissolution terms of the incorporation. 
D)  The corporate seal must be used in the articles of incorporation.

Question 20

A corporation is a(n)________ corporation in the state in which it is incorporated.

Accepted Answer

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

Exam 27: Corporate Formation and Financing

The ________ is the basic governing documents of a corporation that must be filed with the secretary of state of the state of incorporation.

Authorized shares that have been sold by a corporation are called unissued shares.

Which of the following has a fixed maturity date?

A corporation in the state in which it was formed is referred to as a(n)________ corporation.

________ corporations are private corporations that are formed for charitable,educational,religious,or scientific purposes.

Profit corporations are private corporations that are created to conduct a business for profit and can distribute profits to shareholders in the form of dividends.

________ is a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

The judicial dissolution of a corporation can be brought about if the corporation ________.

Redeemable preferred stock allows the preferred stockholders to convert their shares into common stock.

How can a corporation incorporated in one state conduct interstate commerce?

Authorized shares that have not been sold by the corporation are known as ________ shares.

________ is a type of equity security that represents the residual value of a corporation.

No par value shares are common stock on which the corporation has set the lowest price at which the shares may be issued by the corporation.

Which of the following statements about corporations is true?

A registered agent is a person or corporation that is empowered to accept service of process on behalf of a corporation.

Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Explain how the Delaware courts provide assurance to Delaware corporations in trying to decide their liability toward sues.

Which of the following is true for a corporation's liability on the promoters' contracts if the corporation is never formed?

Which of the following must be included in an article of incorporation?

A corporation is a(n)________ corporation in the state in which it is incorporated.

Legal Heritage and the Digital Age

Constitutional Law for Business and E-commerce

Courts and Jurisdiction

Judicial Alternative Administrative and E-Dispute Resolution

Intentional Torts and Negligence

Criminal Law and Cyber Crimes

Intellectual Property and Cyber Piracy

Ethics and Social Responsibility of Business

Nature of Traditional and E-Contracts

Agreement and Consideration

Capacity and Legality

Genuineness of Assent and Statute of Frauds

Third-Party Rights and Discharge

Breach of Contract and Remedies

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties and Product Liability

Creation and Transfer of Negotiable Instruments

Holder in Due Course and Liability of Parties

Banking System and Electronic Financial Transactions

Credit, Real Property Financing, and Secured Transactions

Bankruptcy and Reorganization

Agency law

Small Business, Entrepreneurship, and Partnerships

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchise and Special Forms of Business

Investor Protection, E-Securities, and Wall Street Reform

Antitrust Law and Unfair Trade Practices

Consumer Safety and Environmental Protection

Labor, Worker Protection, and Immigration Laws

Equal Opportunity in Employment

Personal Property, Bailment, and Insurance

Real Property, Landlord-Tenant Law, and Land Use Regulation

Family Law, Wills, and Trusts

Accountants' Duties and Liability

International and World Trade Law

Filters