Question 1

To adopt a contract means to form a new contract with different parties.

Accepted Answer

A) True 
 B)False  False

Question 2

Sara decided to incorporate her business under the name Gomo,Inc.Before Gomo was incorporated,Sara signed a contract in the name of Gomo,Inc.to lease a store front.Sara did not tell the other party that Gomo was not yet formed.Sara is personally liable on the lease.

Accepted Answer

A) True 
 B)False  True

Question 3

The person who creates a corporation is called the

Accepted Answer

A) promoter. 
B) partner. 
C) agent. 
D) incorporator. 
A) promoter. 
B) partner. 
C) agent. 
D) incorporator. A

Question 4

Which state does your textbook cite as being particularly attractive to companies looking to incorporate?

Accepted Answer

A) Ohio 
B) Alaska 
C) Utah 
D) Delaware 
A) Ohio 
B) Alaska 
C) Utah 
D) Delaware

Question 5

Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?

Accepted Answer

Yes,they can sign a shareholder agreemen

Question 6

When a corporation accepts legal responsibility for a contract,it is called novation.

Accepted Answer

A) True 
 B)False

Question 7

The Levitt Corporation charter authorizes 500,000 shares of stock.This stock is referred to as

Accepted Answer

A) treasury stock. 
B) preferred stock. 
C) authorized stock. 
D) common stock. 
A) treasury stock. 
B) preferred stock. 
C) authorized stock. 
D) common stock.

Question 8

Stock is divided into categories called series,and these series can be further divided into subcategories called classes.

Accepted Answer

A) True 
 B)False

Question 9

A business corporation can be incorporated under either state law or federal law.

Accepted Answer

A) True 
 B)False

Question 10

Identify four circumstances that might persuade a court to pierce the corporate veil.

Accepted Answer

Courts generally pierce the corporate ve

Question 11

Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?

Accepted Answer

A) He will be able to use the words "Association" or "Institute" in his company name. 
B) He will not be able to use abbreviations (such as Inc.or Corp. )in his company name. 
C) His company name will not have to include one of the following words: Corporation,Incorporated,Company or Limited. 
D) His company name can be the same as another corporation that already exists in Delaware. 
A) He will be able to use the words "Association" or "Institute" in his company name. 
B) He will not be able to use abbreviations (such as Inc.or Corp. )in his company name. 
C) His company name will not have to include one of the following words: Corporation,Incorporated,Company or Limited. 
D) His company name can be the same as another corporation that already exists in Delaware.

Question 12

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 13

Who elects the officers of a corporation?

Accepted Answer

A) the agents 
B) the shareholders 
C) the incorporators 
D) the directors 
A) the agents 
B) the shareholders 
C) the incorporators 
D) the directors

Question 14

Under most state statutes,a corporation may

Accepted Answer

A) include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith. 
B) include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. 
C) not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. 
D) not include in its charter any provisions regarding indemnification of directors. 
A) include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith. 
B) include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. 
C) not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. 
D) not include in its charter any provisions regarding indemnification of directors.

Question 15

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) secondary 
D) cumulative 
A) domestic 
B) foreign 
C) secondary 
D) cumulative

Question 16

When a company dissolves,preferred stockholders typically have the right to receive their share of corporate assets before common shareholders.

Accepted Answer

A) True 
 B)False

Question 17

Hank owns 100 shares of cumulative preferred stock in Wayside Transport,Inc.Kelsey owns 50 non-cumulative preferred shares,and Oleg owns 120 shares of common stock.Wayside does not pay dividends in 2015.In 2019

Accepted Answer

A) Hank and Kelsey must receive their 2019 dividends before Oleg is paid any 2019 dividends. 
B) Oleg cannot receive any 2019 dividends until Hank is paid for the 2015 dividends. 
C) Kelsey cannot receive the dividends Wayside could not afford to pay in 2015.She will just lose them. 
D) All of these are correct. 
A) Hank and Kelsey must receive their 2019 dividends before Oleg is paid any 2019 dividends. 
B) Oleg cannot receive any 2019 dividends until Hank is paid for the 2015 dividends. 
C) Kelsey cannot receive the dividends Wayside could not afford to pay in 2015.She will just lose them. 
D) All of these are correct.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What is an exculpatory clause?

Accepted Answer

A) a requirement that the company pay the legal fees of directors who are sued for actions taken on behalf of the company 
B) a provision that if a party enters into a contract believing in good faith that the corporation exists,he cannot later take advantage of the fact that it does not 
C) a requirement that a corporation cannot undertake any transaction unless the charter permits it 
D) a provision that protects directors from personal liability to the corporation and its shareholders 
A) a requirement that the company pay the legal fees of directors who are sued for actions taken on behalf of the company 
B) a provision that if a party enters into a contract believing in good faith that the corporation exists,he cannot later take advantage of the fact that it does not 
C) a requirement that a corporation cannot undertake any transaction unless the charter permits it 
D) a provision that protects directors from personal liability to the corporation and its shareholders

Question 20

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.

Exam 33: Life and Death of a Corporation

To adopt a contract means to form a new contract with different parties.

Sara decided to incorporate her business under the name Gomo,Inc.Before Gomo was incorporated,Sara signed a contract in the name of Gomo,Inc.to lease a store front.Sara did not tell the other party that Gomo was not yet formed.Sara is personally liable on the lease.

The person who creates a corporation is called the

Which state does your textbook cite as being particularly attractive to companies looking to incorporate?

Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?

When a corporation accepts legal responsibility for a contract,it is called novation.

The Levitt Corporation charter authorizes 500,000 shares of stock.This stock is referred to as

Stock is divided into categories called series,and these series can be further divided into subcategories called classes.

A business corporation can be incorporated under either state law or federal law.

Identify four circumstances that might persuade a court to pierce the corporate veil.

Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?

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

Who elects the officers of a corporation?

Under most state statutes,a corporation may

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?

When a company dissolves,preferred stockholders typically have the right to receive their share of corporate assets before common shareholders.

Hank owns 100 shares of cumulative preferred stock in Wayside Transport,Inc.Kelsey owns 50 non-cumulative preferred shares,and Oleg owns 120 shares of common stock.Wayside does not pay dividends in 2015.In 2019

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

What is an exculpatory clause?

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

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