Question 1

Eager Beaver Corporation fails to adopt bylaws.Under this circumstance,Eager Beaver is most likely

Accepted Answer

A) a corporation by estoppel. 
B) a de facto corporation. 
C) a de jure corporation. 
D) ultra vires. 
A) a corporation by estoppel. 
B) a de facto corporation. 
C) a de jure corporation. 
D) ultra vires. B

Question 2

The choice of a corporate name is subject to state approval.

Accepted Answer

A) True 
 B)False  True

Question 3

Sullivan and Taylor want to form a corporation to provide catering services.The first step in the incorporation procedure is to

Accepted Answer

A) file the articles of incorporation. 
B) hold the first organizational meeting. 
C) secure a corporate name. 
D) select a state in which to incorporate. 
A) file the articles of incorporation. 
B) hold the first organizational meeting. 
C) secure a corporate name. 
D) select a state in which to incorporate. D

Question 4

Venture capital is capital provided to new business ventures by professional,outside investors.

Accepted Answer

A) True 
 B)False

Question 5

Mari buys 500 shares of common stock in National Livestock Traders,Inc.As a shareholder of record,Mari owns a proportionate interest in terms of

Accepted Answer

A) control,earnings,and net assets. 
B) control only. 
C) earnings and net assets only. 
D) neither control nor earnings and net assets. 
A) control,earnings,and net assets. 
B) control only. 
C) earnings and net assets only. 
D) neither control nor earnings and net assets.

Question 6

Express powers of a corporation can be found in the corporate bylaws.

Accepted Answer

A) True 
 B)False

Question 7

Stable Foundation Construction Corporation's articles list an incorrect address for its incorporator.Under this circumstance,Stable is most likely

Accepted Answer

A) a corporation by estoppel. 
B) a de facto corporation. 
C) a de jure corporation. 
D) ultra vires. 
A) a corporation by estoppel. 
B) a de facto corporation. 
C) a de jure corporation. 
D) ultra vires.

Question 8

Financial Innovations,Inc.,issues bonds,which are also known as

Accepted Answer

A) cumulative investments. 
B) debt securities. 
C) equity securities. 
D) preferred stock. 
A) cumulative investments. 
B) debt securities. 
C) equity securities. 
D) preferred stock.

Question 9

Omega Corporation makes and markets digital timers,clocks,and related products.Like other business corporations,Omega issues securities to

Accepted Answer

A) increase its market share. 
B) obtain financing. 
C) reduce its production costs. 
D) safeguard its facilities. 
A) increase its market share. 
B) obtain financing. 
C) reduce its production costs. 
D) safeguard its facilities.

Question 10

Promoters,not incorporators,must execute the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 11

A shareholder in a professional corporation can be liable for malpractice arising from the rendering of professional services.

Accepted Answer

A) True 
 B)False

Question 12

Finn and Glenda want to form and do business as Hobby Crafts Corporation.A corporation is a legal entity created and recognized by

Accepted Answer

A) a central federal administrative agency. 
B) a city or county clerk's office. 
C) an artificial legal person. 
D) state law. 
A) a central federal administrative agency. 
B) a city or county clerk's office. 
C) an artificial legal person. 
D) state law.

Question 13

A foreign corporation is a corporation formed in another country.

Accepted Answer

A) True 
 B)False

Question 14

Convenience Mart,Inc.,is a close corporation.Convenience Mart is

Accepted Answer

A) eligible to make public offerings of securities. 
B) exempt from filing a certificate of incorporation. 
C) generally allowed to restrict the transfer of its stock. 
D) taxed in the same manner as a partnership. 
A) eligible to make public offerings of securities. 
B) exempt from filing a certificate of incorporation. 
C) generally allowed to restrict the transfer of its stock. 
D) taxed in the same manner as a partnership.

Question 15

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

Accepted Answer

A) True 
 B)False

Question 16

A corporation's internal management structure is described in its articles or bylaws.

Accepted Answer

A) True 
 B)False

Question 17

Suki is a registered agent for Trans-state Trucking,Inc.(TTI),which incorporated in Utah.As a registered agent,Suki

Accepted Answer

A) agreed to buy stock in TTI before it existed. 
B) applied to Utah on behalf of TTI to obtain its corporate charter. 
C) does business for TTI in Utah. 
D) receives legal documents on behalf of TTI. 
A) agreed to buy stock in TTI before it existed. 
B) applied to Utah on behalf of TTI to obtain its corporate charter. 
C) does business for TTI in Utah. 
D) receives legal documents on behalf of TTI.

Question 18

"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.

Accepted Answer

A) True 
 B)False

Question 19

The abbreviation "P.A." in the name "Painless Dental,P.A." means that this organization is

Accepted Answer

A) a private association. 
B) a professional association. 
C) a public association. 
D) a publicly administered corporation. 
A) a private association. 
B) a professional association. 
C) a public association. 
D) a publicly administered corporation.

Question 20

To pierce the corporate veil means to ignore the corporate structure,exposing the shareholders to personal liability.

Accepted Answer

A) True 
 B)False

Exam 34: Corporate Formation and Financing

Eager Beaver Corporation fails to adopt bylaws.Under this circumstance,Eager Beaver is most likely

The choice of a corporate name is subject to state approval.

Sullivan and Taylor want to form a corporation to provide catering services.The first step in the incorporation procedure is to

Venture capital is capital provided to new business ventures by professional,outside investors.

Mari buys 500 shares of common stock in National Livestock Traders,Inc.As a shareholder of record,Mari owns a proportionate interest in terms of

Express powers of a corporation can be found in the corporate bylaws.

Stable Foundation Construction Corporation's articles list an incorrect address for its incorporator.Under this circumstance,Stable is most likely

Financial Innovations,Inc.,issues bonds,which are also known as

Omega Corporation makes and markets digital timers,clocks,and related products.Like other business corporations,Omega issues securities to

Promoters,not incorporators,must execute the articles of incorporation.

A shareholder in a professional corporation can be liable for malpractice arising from the rendering of professional services.

Finn and Glenda want to form and do business as Hobby Crafts Corporation.A corporation is a legal entity created and recognized by

A foreign corporation is a corporation formed in another country.

Convenience Mart,Inc.,is a close corporation.Convenience Mart is

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

A corporation's internal management structure is described in its articles or bylaws.

Suki is a registered agent for Trans-state Trucking,Inc.(TTI),which incorporated in Utah.As a registered agent,Suki

"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.

The abbreviation "P.A." in the name "Painless Dental,P.A." means that this organization is

To pierce the corporate veil means to ignore the corporate structure,exposing the shareholders to personal liability.

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