Question 1

Fashions,Inc.has 12 shareholders.The company is subject to the Model Act.What officers is Fashions,Inc.required to have?

Accepted Answer

A) A president,secretary,and treasurer. 
B) A president and a secretary,and they can be the same person. 
C) A president,at least one vice-president,a secretary,and a chief financial officer. 
D) Whatever officers are described in the corporate bylaws. 
A) A president,secretary,and treasurer. 
B) A president and a secretary,and they can be the same person. 
C) A president,at least one vice-president,a secretary,and a chief financial officer. 
D) Whatever officers are described in the corporate bylaws. D

Question 2

The term "corporate manager" refers to:

Accepted Answer

A) directors. 
B) corporate officers. 
C) Both of the above. 
D) None of the above. 
A) directors. 
B) corporate officers. 
C) Both of the above. 
D) None of the above. C

Question 3

A corporation is not allowed to issue dividends to shareholders unless it is solvent.

Accepted Answer

A) True 
 B)False  True

Question 4

Incorporators are required to sign the charter,deliver it to the proper state officials,and purchase a certain percentage of the initial stock offering.

Accepted Answer

A) True 
 B)False

Question 5

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:

Accepted Answer

A) must incorporate the business in Wisconsin,the home state. 
B) must incorporate the business in Wisconsin,California,Michigan,Pennsylvania and Virginia. 
C) must incorporate in Delaware. 
D) can incorporate the business in any state. 
A) must incorporate the business in Wisconsin,the home state. 
B) must incorporate the business in Wisconsin,California,Michigan,Pennsylvania and Virginia. 
C) must incorporate in Delaware. 
D) can incorporate the business in any state.

Question 6

Common stock is last stock in line for any corporate payouts,including dividends and liquidation payments.

Accepted Answer

A) True 
 B)False

Question 7

Carey decided to incorporate her business under the name yStar Inc.Before yStar was incorporated,Carey signed a contract in the name of yStar,Inc.to have some office space remodeled.Which statement is correct?

Accepted Answer

A) yStar is liable on the contract because the contract was signed in its name. 
B) yStar becomes liable on the contract as soon as it is incorporated. 
C) yStar is liable on the contract if the contractor knows that the corporation does not yet exist. 
D) yStar will be liable on the contract only if the corporation adopts the contract. 
A) yStar is liable on the contract because the contract was signed in its name. 
B) yStar becomes liable on the contract as soon as it is incorporated. 
C) yStar is liable on the contract if the contractor knows that the corporation does not yet exist. 
D) yStar will be liable on the contract only if the corporation adopts the contract.

Question 8

MegaCorp is incorporated under Delaware law.It is registered to do business in New York.Legally,in New York MegaCorp is known as what kind of corporation?

Accepted Answer

A) Domestic. 
B) Foreign. 
C) Alien. 
D) Cumulative. 
A) Domestic. 
B) Foreign. 
C) Alien. 
D) Cumulative.

Question 9

A proxy is a vote that is mailed in,like an absentee ballot.

Accepted Answer

A) True 
 B)False

Question 10

Veritas,Inc.is planning its annual shareholder meeting on June 15.The company:

Accepted Answer

A) need not send notices of the meeting to shareholders since it is the regularly scheduled,annual meeting,which Veritas always holds on the third Thursday of June. 
B) must send notices to everyone who owns stock as of January 1. 
C) must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting. 
D) is not required to have an annual shareholders meeting if the company is listed only on the NYSE. 
A) need not send notices of the meeting to shareholders since it is the regularly scheduled,annual meeting,which Veritas always holds on the third Thursday of June. 
B) must send notices to everyone who owns stock as of January 1. 
C) must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting. 
D) is not required to have an annual shareholders meeting if the company is listed only on the NYSE.

Question 11

Which of the following describes the duty of loyalty?

Accepted Answer

A) It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. 
B) It prohibits making a decision that benefits the decision-maker at the expense of the corporation. 
C) It requires consideration of the interests of the surrounding community. 
D) It requires using care that an ordinarily prudent person would take in a similar situation. 
A) It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. 
B) It prohibits making a decision that benefits the decision-maker at the expense of the corporation. 
C) It requires consideration of the interests of the surrounding community. 
D) It requires using care that an ordinarily prudent person would take in a similar situation.

Question 12

Charles owns 1,000 shares of stock in Temperan,Inc.Charles wants to obtain corporate records including the corporation's minute book and accounting records.Under the Model Act,Charles is entitled to this information if he requests it in good faith and:

Accepted Answer

A) he has a proper purpose. 
B) he owns at least 1 percent of the company or $2,000 of stock. 
C) he is an employee of Temperan. 
D) he is a controlling shareholder. 
A) he has a proper purpose. 
B) he owns at least 1 percent of the company or $2,000 of stock. 
C) he is an employee of Temperan. 
D) he is a controlling shareholder.

Question 13

The "business judgment rule" has been replaced by "good faith statutes" in most states.

Accepted Answer

A) True 
 B)False

Question 14

A corporation is required to have at least one class of stock with voting rights.

Accepted Answer

A) True 
 B)False

Question 15

The officers of a corporation are:

Accepted Answer

A) chosen by the board of directors. 
B) appointed by the president of the company. 
C) elected by shareholders. 
D) appointed by the Secretary of State. 
A) chosen by the board of directors. 
B) appointed by the president of the company. 
C) elected by shareholders. 
D) appointed by the Secretary of State.

Question 16

A corporation's obligation to provide shareholders with financial information:

Accepted Answer

A) depends on whether the company is publicly or privately held. 
B) depends on the requirements of the Model Business Corporation Act,which is widely followed in regard to the shareholders' right to information. 
C) is extensive and is carefully regulated by the SEC if the company is privately held. 
D) All the above. 
A) depends on whether the company is publicly or privately held. 
B) depends on the requirements of the Model Business Corporation Act,which is widely followed in regard to the shareholders' right to information. 
C) is extensive and is carefully regulated by the SEC if the company is privately held. 
D) All the above.

Question 17

Management's duty to have a rational business purpose,avoid illegal behavior,and make informed decisions refers to its:

Accepted Answer

A) duty of care. 
B) duty of loyalty. 
C) duty of openness. 
D) duty of fairness. 
A) duty of care. 
B) duty of loyalty. 
C) duty of openness. 
D) duty of fairness.

Question 18

For the business judgment rule to apply:

Accepted Answer

A) there must be a conflict of interest. 
B) the director must exercise extraordinary care. 
C) the director must act in the best interests of the corporation. 
D) All of the above. 
A) there must be a conflict of interest. 
B) the director must exercise extraordinary care. 
C) the director must act in the best interests of the corporation. 
D) All of the above.

Question 19

Before filing a derivative lawsuit,shareholders must:

Accepted Answer

A) notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly. 
B) notify the Secretary of State that the corporation has been wronged and ask the Attorney General to file the lawsuit on behalf of the corporation. 
C) hold a special meeting,and a majority of the shareholders must vote to file the lawsuit. 
D) place the lawsuit on the company's proxy statement,and the proposal must receive a majority vote. 
A) notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly. 
B) notify the Secretary of State that the corporation has been wronged and ask the Attorney General to file the lawsuit on behalf of the corporation. 
C) hold a special meeting,and a majority of the shareholders must vote to file the lawsuit. 
D) place the lawsuit on the company's proxy statement,and the proposal must receive a majority vote.

Question 20

Corporate stock can be divided into categories called ________,which can be further divided into ________.

Accepted Answer

A) authorized shares,classes. 
B) classes,series. 
C) equity,assets. 
D) debentures,classes. 
A) authorized shares,classes. 
B) classes,series. 
C) equity,assets. 
D) debentures,classes.

Exam 29: Corporations

Fashions,Inc.has 12 shareholders.The company is subject to the Model Act.What officers is Fashions,Inc.required to have?

The term "corporate manager" refers to:

A corporation is not allowed to issue dividends to shareholders unless it is solvent.

Incorporators are required to sign the charter,deliver it to the proper state officials,and purchase a certain percentage of the initial stock offering.

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:

Common stock is last stock in line for any corporate payouts,including dividends and liquidation payments.

Carey decided to incorporate her business under the name yStar Inc.Before yStar was incorporated,Carey signed a contract in the name of yStar,Inc.to have some office space remodeled.Which statement is correct?

MegaCorp is incorporated under Delaware law.It is registered to do business in New York.Legally,in New York MegaCorp is known as what kind of corporation?

A proxy is a vote that is mailed in,like an absentee ballot.

Veritas,Inc.is planning its annual shareholder meeting on June 15.The company:

Which of the following describes the duty of loyalty?

Charles owns 1,000 shares of stock in Temperan,Inc.Charles wants to obtain corporate records including the corporation's minute book and accounting records.Under the Model Act,Charles is entitled to this information if he requests it in good faith and:

The "business judgment rule" has been replaced by "good faith statutes" in most states.

A corporation is required to have at least one class of stock with voting rights.

The officers of a corporation are:

A corporation's obligation to provide shareholders with financial information:

Management's duty to have a rational business purpose,avoid illegal behavior,and make informed decisions refers to its:

For the business judgment rule to apply:

Before filing a derivative lawsuit,shareholders must:

Corporate stock can be divided into categories called ________,which can be further divided into ________.

Introduction to Law

Business Ethics and Social Responsibility

Dispute Resolution

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Torts and Product Liability

Crime

International Law

Introduction to Contracts

Agreement

Consideration

Legality

Capacity and Consent

Written Contracts

Third parties

Performance and Discharge

Remedies

practical Contracts

Introduction to Sales

Ownership and Warranties

Performance and Remedies

Negotiable Instruments

Secured Transactions

Bankruptcy

Agency

Employment and Labor Law

Employment and Discrimination

Starting a Business

Government Regulations:Securities and Antitrust

Consumer Protection

Cyberlaw

Intellectual Property

Real and Personal Property

Filters

Corporate stock can be divided into categories called ,which can be further divided into .