Question 1

A promoter can enter into contracts as needed for the corporation.

Accepted Answer

A) True 
 B)False  True

Question 2

Regarding promoters, which of the following is false?

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. 
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. D

Question 3

In the corporate formation process, which of the following provides basic information about the corporation?

Accepted Answer

A)  The articles of subscription 
B)  The agreement to promote 
C)  The agreement to subscribe 
D)  The agreement to incorporate 
E)  The articles of incorporation 
A)  The articles of subscription 
B)  The agreement to promote 
C)  The agreement to subscribe 
D)  The agreement to incorporate 
E)  The articles of incorporation E

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. 
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.

Question 5

If over 50% of the shareholders die, a corporation must be dissolved.

Accepted Answer

A) True 
 B)False

Question 6

A bond in which no assets support the corporations' obligation to repay the face value of the bond is called a(n) ________ bond?

Accepted Answer

A)  Unsecured 
B)  Secured 
C)  Equity 
D)  Convertible 
E)  Income 
A)  Unsecured 
B)  Secured 
C)  Equity 
D)  Convertible 
E)  Income

Question 7

[Horse Tracks] Min-ji, Marcus, and Penelope decided to form a corporation called Horse Tracks to raise horses. They all began the incorporation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Min-ji, Marcus, and Penelope had entered into while organizing the corporation. Callie, the seller of the feed, claimed that she had not been fully paid and threatened to sue the corporation. The contract Min-ji, Marcus, and Penelope had with Callie did not reference liability after the new corporation came into legal existence. Min-ji, Marcus, and Penelope asked for a novation, but were uncertain as to whether that would occur.
-The contracts Min-ji, Marcus, and Penelope made with their friends to buy stock are known by what term?

Accepted Answer

A)  Promotion agreements 
B)  Capital agreements 
C)  Subscription agreements 
D)  Novation agreements 
E)  Acceptor agreements 
A)  Promotion agreements 
B)  Capital agreements 
C)  Subscription agreements 
D)  Novation agreements 
E)  Acceptor agreements

Question 8

A bond in which specific property supports the corporations' obligation to repay the face value of the bond is called a(n) ________ bond?

Accepted Answer

A)  Unsecured 
B)  Secured 
C)  Equity 
D)  Convertible 
E)  Income 
A)  Unsecured 
B)  Secured 
C)  Equity 
D)  Convertible 
E)  Income

Question 9

Corporations are considered to be legal persons.

Accepted Answer

A) True 
 B)False

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

________ occurs when both a corporation pays taxes on dividends and shareholders pay taxes on dividends receive.

Accepted Answer

A)  Shared liability 
B)  Double taxation 
C)  Corporate penalty taxation 
D)  Dual taxation 
E)  IRS taxation rule of corporate existance 
A)  Shared liability 
B)  Double taxation 
C)  Corporate penalty taxation 
D)  Dual taxation 
E)  IRS taxation rule of corporate existance

Question 12

Which of the following is false regarding the question presented in the Case Opener regarding Facebook's status as a corporation?

Accepted Answer

A)  Its corporate status allows it to sue and be sued. 
B)  Its corporate status allows it to enjoy existence for up to 100 years. 
C)  Its corporate status allows it to acquire property. 
D)  Its corporate status allows it to make contracts. 
E)  Its corporate status allows it to make charitable donations. 
A)  Its corporate status allows it to sue and be sued. 
B)  Its corporate status allows it to enjoy existence for up to 100 years. 
C)  Its corporate status allows it to acquire property. 
D)  Its corporate status allows it to make contracts. 
E)  Its corporate status allows it to make charitable donations.

Question 13

Shareholders adopt a set of corporate bylaws which do what for the corporation?

Accepted Answer

A)  Govern how directors should invest dividends 
B)  Govern the corporations internal management 
C)  Determine when a corporation should dissolve due to lack of profit 
D)  Determine how stock options should be paid 
E)  Determine who can be part of the corporate structure 
A)  Govern how directors should invest dividends 
B)  Govern the corporations internal management 
C)  Determine when a corporation should dissolve due to lack of profit 
D)  Determine how stock options should be paid 
E)  Determine who can be part of the corporate structure

Question 14

Regarding Société Anonymes (SA) companies in France,

Accepted Answer

A)  SA companies offer shares to the public and must have at least seven shareholders. 
B)  SA companies do not have to offer shares to the public and may keep all income statements private. 
C)  French law requires that all SA companies register with the French authorities. 
D)  French law requires that a portion of all profits be repatriated to the government. 
E)  SA companies share personal liability for all member's misdeeds. 
A)  SA companies offer shares to the public and must have at least seven shareholders. 
B)  SA companies do not have to offer shares to the public and may keep all income statements private. 
C)  French law requires that all SA companies register with the French authorities. 
D)  French law requires that a portion of all profits be repatriated to the government. 
E)  SA companies share personal liability for all member's misdeeds.

Question 15

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

Question 16

Under United States laws, corporations are legal entities and do not exit separately from their shareholders.

Accepted Answer

A) True 
 B)False

Question 17

What is the difference between a promoter and a subscriber?

Accepted Answer

Two groups of important players are resp

Question 18

Corporations have many express powers. Which of the following would not be an express power of a corporation?

Accepted Answer

A)  Perpetual existence. 
B)  Power to sue and be sued in the corporations' name. 
C)  Power to buy and sell property. 
D)  Power to eliminate double taxation. 
E)  Powers to make contracts and borrow money. 
A)  Perpetual existence. 
B)  Power to sue and be sued in the corporations' name. 
C)  Power to buy and sell property. 
D)  Power to eliminate double taxation. 
E)  Powers to make contracts and borrow money.

Question 19

A statement of purpose grants a corporation power to engage in certain business activities.

Accepted Answer

A) True 
 B)False

Question 20

[Horse Tracks] Min-ji, Marcus, and Penelope decided to form a corporation called Horse Tracks to raise horses. They all began the incorporation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Min-ji, Marcus, and Penelope had entered into while organizing the corporation. Callie, the seller of the feed, claimed that she had not been fully paid and threatened to sue the corporation. The contract Min-ji, Marcus, and Penelope had with Callie did not reference liability after the new corporation came into legal existence. Min-ji, Marcus, and Penelope asked for a novation, but were uncertain as to whether that would occur.
-The friends who agreed to buy stock are known by what term?

Accepted Answer

A)  Promoters 
B)  Subscribers 
C)  Novators 
D)  Subscriptioners 
E)  Acceptors 
A)  Promoters 
B)  Subscribers 
C)  Novators 
D)  Subscriptioners 
E)  Acceptors

Exam 38: Corporations: Formation and Financing

A promoter can enter into contracts as needed for the corporation.

Regarding promoters, which of the following is false?

In the corporate formation process, which of the following provides basic information about the corporation?

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

If over 50% of the shareholders die, a corporation must be dissolved.

A bond in which no assets support the corporations' obligation to repay the face value of the bond is called a(n) ________ bond?

A bond in which specific property supports the corporations' obligation to repay the face value of the bond is called a(n) ________ bond?

Corporations are considered to be legal persons.

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.

________ occurs when both a corporation pays taxes on dividends and shareholders pay taxes on dividends receive.

Which of the following is false regarding the question presented in the Case Opener regarding Facebook's status as a corporation?

Shareholders adopt a set of corporate bylaws which do what for the corporation?

Regarding Société Anonymes (SA) companies in France,

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.

Under United States laws, corporations are legal entities and do not exit separately from their shareholders.

What is the difference between a promoter and a subscriber?

Corporations have many express powers. Which of the following would not be an express power of a corporation?

A statement of purpose grants a corporation power to engage in certain business activities.

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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