Question 1

What are the principal attributes of a corporation?

Accepted Answer

The principal attributes of a corporation are as follows: (1) It is a legal entity.
(2) It owes its existence to a state, which also regulates it. (3) It provides limited liability to its shareholders.
(4) Its shares of stock are freely transferable. (5) Its existence may be perpetual.
(6) Its management is centralized.
(7) For some purposes, it is considered a person; and
(8) For some purposes, it is considered a citizen.

Question 2

The Model Business Corporation Act provides for small, closely held corporations to be organized and creates
Subchapter S corporations with special benefits.

Accepted Answer

A) True 
 B)False  False

Question 3

The Internal Revenue Service allows taxation of certain corporations to be similar to that of partnerships.

Accepted Answer

A) True 
 B)False  True

Question 4

"Piercing the corporate veil" will result in personal liability of shareholders.

Accepted Answer

A) True 
 B)False

Question 5

Promoters have a fiduciary duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 6

The bylaws of the corporation:

Accepted Answer

A)  are adopted as one of the first items of business at the organizational meeting held promptly after incorporation. 
B)  may contain any provision for managing the business not inconsistent with law or the charter. 
C)  may be repealed by the board of directors. 
D)  All of these. 
A)  are adopted as one of the first items of business at the organizational meeting held promptly after incorporation. 
B)  may contain any provision for managing the business not inconsistent with law or the charter. 
C)  may be repealed by the board of directors. 
D)  All of these.

Question 7

Matt and Ron would like to form a corporation. Discuss what is required in most states to form a corporation.

Accepted Answer

Organizers or promoters arrange for capi

Question 8

Which of the following run the day-to-day operations of a corporation?

Accepted Answer

A)  Shareholders 
B)  Board of directors 
C)  Officers 
D)  Subscribers 
A)  Shareholders 
B)  Board of directors 
C)  Officers 
D)  Subscribers

Question 9

A postincorporation subscription is:

Accepted Answer

A)  like a preincorporation subscription in that the subscriber may withdraw the offer to enter into the subscription any time before the corporation accepts it. 
B)  treated as a contract between the subscriber and the corporation. 
C)  not recognized under the RMBCA. 
D)  defined under the RMBCA as a contract between all subscribers. 
A)  like a preincorporation subscription in that the subscriber may withdraw the offer to enter into the subscription any time before the corporation accepts it. 
B)  treated as a contract between the subscriber and the corporation. 
C)  not recognized under the RMBCA. 
D)  defined under the RMBCA as a contract between all subscribers.

Question 10

The Tennessee Valley Authority is an example of a private corporation.

Accepted Answer

A) True 
 B)False

Question 11

Zeron Corporation is incorporated in the State of West Virginia. It now wants to open a retail outlet in Kentucky.
Zeron must obtain a certificate of authority allowing it to do business in the Commonwealth of Kentucky.

Accepted Answer

A) True 
 B)False

Question 12

Master Ink owns all the stock of Prime Pen Co. A Prime Pen employee commits a tort for which the employer is liable. The suit results in a judgment for $1 million against Prime Pen. Prime Pen assets total $650,000, but Master Ink's assets are in the millions. In which of the following situations would the judgment have to be paid by Master Ink?

Accepted Answer

A)  The Master Ink board of directors is exactly the same as Prime Pen's. 
B)  The president of Master Ink is also the vice president of Prime Pen. 
C)  Prime Pen's income and Master Ink's income is held in one account. 
D)  None of these. 
A)  The Master Ink board of directors is exactly the same as Prime Pen's. 
B)  The president of Master Ink is also the vice president of Prime Pen. 
C)  Prime Pen's income and Master Ink's income is held in one account. 
D)  None of these.

Question 13

Which of the following is not true of promoters of a corporation?

Accepted Answer

A)  They arrange for capital and financing to start a corporation. 
B)  They assemble the necessary assets to start a corporation. 
C)  They attend to the actual legal formation of a corporation. 
D)  They continue to solicit capital whenever needed after incorporation. 
A)  They arrange for capital and financing to start a corporation. 
B)  They assemble the necessary assets to start a corporation. 
C)  They attend to the actual legal formation of a corporation. 
D)  They continue to solicit capital whenever needed after incorporation.

Question 14

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the Office of the Secretary of State or some other public office.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a general corporate power typically granted by incorporation statutes, including the RMBCA?

Accepted Answer

A)  To have a corporate seal 
B)  To own and vote shares of other entities 
C)  To make donations for charitable or educational purposes 
D)  All of these are typical corporate powers. 
A)  To have a corporate seal 
B)  To own and vote shares of other entities 
C)  To make donations for charitable or educational purposes 
D)  All of these are typical corporate powers.

Question 16

The City of Chicago would best be described as which of the following?

Accepted Answer

A)  A corporation formed pursuant to the Model Business Corporation Act 
B)  A close corporation 
C)  A public corporation 
D)  A domestic corporation 
A)  A corporation formed pursuant to the Model Business Corporation Act 
B)  A close corporation 
C)  A public corporation 
D)  A domestic corporation

Question 17

A corporation is considered a citizen:

Accepted Answer

A)  under the Fourteenth Amendment's "privileges or immunities" clause. 
B)  of the state of its incorporation or where it has its principal office. 
C)  of all states where it does business. 
D)  All of these. 
A)  under the Fourteenth Amendment's "privileges or immunities" clause. 
B)  of the state of its incorporation or where it has its principal office. 
C)  of all states where it does business. 
D)  All of these.

Question 18

Discuss the corporate form of business organization with respect to how it is created, the liability of persons having an ownership interest, how management is conducted, and duration of existence.

Accepted Answer

A corporation is formed only by substant

Question 19

A corporation must keep its funds separate from those of its shareholders.

Accepted Answer

A) True 
 B)False

Question 20

"Doing business" within a particular state will subject a foreign corporation to the litigation, regulation, and taxation of that state.

Accepted Answer

A) True 
 B)False

Exam 33: Nature, Formation, and Powers

What are the principal attributes of a corporation?

The Model Business Corporation Act provides for small, closely held corporations to be organized and creates Subchapter S corporations with special benefits.

The Internal Revenue Service allows taxation of certain corporations to be similar to that of partnerships.

"Piercing the corporate veil" will result in personal liability of shareholders.

Promoters have a fiduciary duty to the corporation.

The bylaws of the corporation:

Matt and Ron would like to form a corporation. Discuss what is required in most states to form a corporation.

Which of the following run the day-to-day operations of a corporation?

A postincorporation subscription is:

The Tennessee Valley Authority is an example of a private corporation.

Zeron Corporation is incorporated in the State of West Virginia. It now wants to open a retail outlet in Kentucky. Zeron must obtain a certificate of authority allowing it to do business in the Commonwealth of Kentucky.

Which of the following is not true of promoters of a corporation?

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the Office of the Secretary of State or some other public office.

Which of the following is not a general corporate power typically granted by incorporation statutes, including the RMBCA?

The City of Chicago would best be described as which of the following?

A corporation is considered a citizen:

Discuss the corporate form of business organization with respect to how it is created, the liability of persons having an ownership interest, how management is conducted, and duration of existence.

A corporation must keep its funds separate from those of its shareholders.

"Doing business" within a particular state will subject a foreign corporation to the litigation, regulation, and taxation of that state.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

Contracts

Agency

Sales

Negotiable Instruments

Unincorporated Business Associations

Corporations

Debtor and Creditor Relations

Regulation of Business

Property

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