Question 1

Redemption of shares generally results in an increase of treasury stock.

Accepted Answer

A) True 
 B)False  True

Question 2

Gail transfers property to Tel Ko Corp.that she claims is valued at $5,000.The directors determine that the property is adequate to be exchanged for $5,000 worth of Tel Ko Corp.stock.Later it is discovered that the property's true value is $2,000.Under the RMBCA, which is true regarding Gail's liability?

Accepted Answer

A) She has none, since the directors' determination of adequacy of consideration was conclusive. 
B) She is liable to the creditors of the corporation for the $3,000. 
C) She is liable to the corporation for $3,000. 
D) She is liable to both the corporation and its creditors for $3,000. 
A) She has none, since the directors' determination of adequacy of consideration was conclusive. 
B) She is liable to the creditors of the corporation for the $3,000. 
C) She is liable to the corporation for $3,000. 
D) She is liable to both the corporation and its creditors for $3,000. A

Question 3

Participating stock will:

Accepted Answer

A) share with common stock any additional dividends after preferred and common stockholders receive their normal dividends. 
B) accumulate dividends that will be paid later. 
C) participate in earnings only to the extent that all other classes do. 
D) participate in earnings to the same extent as common stock. 
A) share with common stock any additional dividends after preferred and common stockholders receive their normal dividends. 
B) accumulate dividends that will be paid later. 
C) participate in earnings only to the extent that all other classes do. 
D) participate in earnings to the same extent as common stock. A

Question 4

What is the principal source for corporate financing?

Accepted Answer

A) Debt 
B) Equity investment securities 
C) Both of these. 
D) None of these. 
A) Debt 
B) Equity investment securities 
C) Both of these. 
D) None of these.

Question 5

The MBCA, RMBCA, and statutes of many states permit corporations to redeem both preferred and common stock.

Accepted Answer

A) True 
 B)False

Question 6

"Blue sky laws" are state laws that regulate corporate stock issuance and sale.

Accepted Answer

A) True 
 B)False

Question 7

If dividends are not declared for five years, but the company has accumulated earnings each year, the shareholders may:

Accepted Answer

A) petition the court of law for redress. 
B) override the board with a two-thirds vote. 
C) ask for an injunction requiring a dividend to be declared. 
D) do nothing but sell their stock. 
A) petition the court of law for redress. 
B) override the board with a two-thirds vote. 
C) ask for an injunction requiring a dividend to be declared. 
D) do nothing but sell their stock.

Question 8

Earned surplus would include undistributed net profits, income, gains and losses from the date of incorporation.

Accepted Answer

A) True 
 B)False

Question 9

Preemptive rights are shareholders' rights to purchase a proportionate part of a new issue of stock.

Accepted Answer

A) True 
 B)False

Question 10

Shareholders have residual authority over increases in the amount of authorized capital stock.

Accepted Answer

A) True 
 B)False

Question 11

A share dividend:

Accepted Answer

A) is a type of distribution. 
B) makes no difference in the assets of the corporation or in the shareholder's relative interest in the net worth of the corporation. 
C) is also known as a property dividend. 
D) All of these. 
A) is a type of distribution. 
B) makes no difference in the assets of the corporation or in the shareholder's relative interest in the net worth of the corporation. 
C) is also known as a property dividend. 
D) All of these.

Question 12

A director who is a member of the board that declares an illegal dividend is not personally liable to the company for the amount that is illegal.

Accepted Answer

A) True 
 B)False

Question 13

The Revised Act does not consider a stock dividend issued by ZYX Corporation to its stockholders a distribution.

Accepted Answer

A) True 
 B)False

Question 14

Two principal sources for corporate financing are debt and equity investment securities.

Accepted Answer

A) True 
 B)False

Question 15

Under the RMBCA, if the charter states that "the corporation elects to have preemptive rights," shareholders have preemptive rights with respect to:

Accepted Answer

A) shares issued as compensation to directors, officers, and employees. 
B) shares issued within six months of incorporation. 
C) shares issued for consideration other than money. 
D) unissued shares. 
A) shares issued as compensation to directors, officers, and employees. 
B) shares issued within six months of incorporation. 
C) shares issued for consideration other than money. 
D) unissued shares.

Question 16

The board of directors of Z & X Corporation declared cash dividends of $5 per share.If these dividends are not paid, a shareholder can bring suit to require payment.

Accepted Answer

A) True 
 B)False

Question 17

The federal government leaves corporate stock regulation to the states, since corporations are state-created entities.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is correct regarding a two-for-one stock split?

Accepted Answer

A) The purpose of the split may be to increase the number of potential stockholders. 
B) The purpose of the split is to make a distribution to the stockholders. 
C) After the split, each stockholder will have greater ownership interest in the corporation. 
D) The value of each share of stock will increase as a result of the split. 
A) The purpose of the split may be to increase the number of potential stockholders. 
B) The purpose of the split is to make a distribution to the stockholders. 
C) After the split, each stockholder will have greater ownership interest in the corporation. 
D) The value of each share of stock will increase as a result of the split.

Question 19

Article 8 of the UCC contains rules applicable to transfers of investment securities.

Accepted Answer

A) True 
 B)False

Question 20

The RMBCA has adopted a net assets test for the issuance of dividends.

Accepted Answer

A) True 
 B)False

Exam 34: Financial Structure

Redemption of shares generally results in an increase of treasury stock.

Participating stock will:

What is the principal source for corporate financing?

The MBCA, RMBCA, and statutes of many states permit corporations to redeem both preferred and common stock.

"Blue sky laws" are state laws that regulate corporate stock issuance and sale.

If dividends are not declared for five years, but the company has accumulated earnings each year, the shareholders may:

Earned surplus would include undistributed net profits, income, gains and losses from the date of incorporation.

Preemptive rights are shareholders' rights to purchase a proportionate part of a new issue of stock.

Shareholders have residual authority over increases in the amount of authorized capital stock.

A share dividend:

A director who is a member of the board that declares an illegal dividend is not personally liable to the company for the amount that is illegal.

The Revised Act does not consider a stock dividend issued by ZYX Corporation to its stockholders a distribution.

Two principal sources for corporate financing are debt and equity investment securities.

Under the RMBCA, if the charter states that "the corporation elects to have preemptive rights," shareholders have preemptive rights with respect to:

The board of directors of Z & X Corporation declared cash dividends of $5 per share.If these dividends are not paid, a shareholder can bring suit to require payment.

The federal government leaves corporate stock regulation to the states, since corporations are state-created entities.

Which of the following is correct regarding a two-for-one stock split?

Article 8 of the UCC contains rules applicable to transfers of investment securities.

The RMBCA has adopted a net assets test for the issuance of dividends.

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

Nature, Formation, and Powers

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

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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