Question 1

In all states,Sports Fitness Club Company and other corporations can pay dividends from

Accepted Answer

A) gross profits. 
B) net profits. 
C) retained earnings. 
D) surplus. 
A) gross profits. 
B) net profits. 
C) retained earnings. 
D) surplus. C

Question 2

A board of directors cannot conduct business outside a formal meeting.

Accepted Answer

A) True 
 B)False  False

Question 3

In most states,a director cannot be removed from a corporate board without cause.

Accepted Answer

A) True 
 B)False  True

Question 4

A director cannot be elected by the other members of the board.

Accepted Answer

A) True 
 B)False

Question 5

Denise,Ervin,and Flem occupy the positions of directors on the board of Gallery Corporation.As directors,they may not

Accepted Answer

A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) support businesses that directly compete with Gallery. 
A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) support businesses that directly compete with Gallery.

Question 6

Orin is a shareholder of Pinkwater Corporation.In some states,Orin might incur personal liability for unpaid Pinkwater debts if he

Accepted Answer

A) accepts a dividend knowing that it was paid from retained earn?ings. 
B) buys stock for less than its fair-market value. 
C) fails to fulfill his fiduciary duty to the majority shareholders. 
D) sells his shares. 
A) accepts a dividend knowing that it was paid from retained earn?ings. 
B) buys stock for less than its fair-market value. 
C) fails to fulfill his fiduciary duty to the majority shareholders. 
D) sells his shares.

Question 7

Some states permit a corporate board to have fewer than three directors.

Accepted Answer

A) True 
 B)False

Question 8

Bea is a shareholder of Candy Confections Corporation.The right to inspect corporate books and records is

Accepted Answer

A) held by Bea only if she is a director. 
B) held by Bea,without restrictions. 
C) held by Bea,with some restrictions. 
D) not held by Bea. 
A) held by Bea only if she is a director. 
B) held by Bea,without restrictions. 
C) held by Bea,with some restrictions. 
D) not held by Bea.

Question 9

Luke is a director of Motor Parts Corporation.Luke makes decisions with respect to Motor Parts in good faith,in what he believes is the firm's best interest,and without violating any duties owed to it.If,despite these circumstances,Luke exercises poor business judgment,under the business judgment rule Luke is

Accepted Answer

A) immune from liability. 
B) liable only to the extent that he gains as a result. 
C) liable only to the extent that Motor Parts suffers as a result. 
D) wholly liable. 
A) immune from liability. 
B) liable only to the extent that he gains as a result. 
C) liable only to the extent that Motor Parts suffers as a result. 
D) wholly liable.

Question 10

Incorporators appoint a corporation's first board of directors.

Accepted Answer

A) True 
 B)False

Question 11

Flite-Craft Corporation makes and sells aircraft parts.In most states,the minimum number of directors that must be present before Flite-Craft's board can transact its business is

Accepted Answer

A) all of the directors authorized in the articles or bylaws. 
B) a majority of the number authorized in the articles or bylaws. 
C) any odd number. 
D) one. 
A) all of the directors authorized in the articles or bylaws. 
B) a majority of the number authorized in the articles or bylaws. 
C) any odd number. 
D) one.

Question 12

Sophie and Tiny incorporate their beverage-container business as U-Twist Products,Inc.The first board of directors may be appointed by the firm's

Accepted Answer

A) employees. 
B) incorporators. 
C) officers. 
D) shareholders. 
A) employees. 
B) incorporators. 
C) officers. 
D) shareholders.

Question 13

Fiona owns one share of stock in GR8 Boards Corporation,as evidenced by a stock certificate.Fiona loses the certificate.Her ownership of the stock is

Accepted Answer

A) forfeited immediately. 
B) forfeited within ten days of a third party's claim to ownership. 
C) forfeited within thirty days if she cannot find the certificate. 
D) not affected. 
A) forfeited immediately. 
B) forfeited within ten days of a third party's claim to ownership. 
C) forfeited within thirty days if she cannot find the certificate. 
D) not affected.

Question 14

Officers are required to exercise a reasonable amount of supervision over the corporate directors.

Accepted Answer

A) True 
 B)False

Question 15

Only certain funds are legally available for paying dividends.

Accepted Answer

A) True 
 B)False

Question 16

A dividend may be paid from undistributed net corporate profits.

Accepted Answer

A) True 
 B)False

Question 17

Brad is a shareholder of Concert Promotion Corporation.As a shareholder,Brad can

Accepted Answer

A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) vote to amend the articles of incorporation or bylaws. 
A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) vote to amend the articles of incorporation or bylaws.

Question 18

Thor Power Products Corporation permits its directors to be elected by cumulative voting.This

Accepted Answer

A) allows minority shareholders to be represented on the board. 
B) assures directors that they will be selected by their peers. 
C) guarantees Thor's executive officers of the final choice. 
D) ensures against persons who may "cloud" the corporate direction. 
A) allows minority shareholders to be represented on the board. 
B) assures directors that they will be selected by their peers. 
C) guarantees Thor's executive officers of the final choice. 
D) ensures against persons who may "cloud" the corporate direction.

Question 19

For action to be taken during a shareholders' meeting,a forum must be present.

Accepted Answer

A) True 
 B)False

Question 20

Shareholder voting agreements are usually held to be invalid and unenforceable.

Accepted Answer

A) True 
 B)False

Exam 35: Corporate Directors,officers, Shareholders

In all states,Sports Fitness Club Company and other corporations can pay dividends from

A board of directors cannot conduct business outside a formal meeting.

In most states,a director cannot be removed from a corporate board without cause.

A director cannot be elected by the other members of the board.

Denise,Ervin,and Flem occupy the positions of directors on the board of Gallery Corporation.As directors,they may not

Orin is a shareholder of Pinkwater Corporation.In some states,Orin might incur personal liability for unpaid Pinkwater debts if he

Some states permit a corporate board to have fewer than three directors.

Bea is a shareholder of Candy Confections Corporation.The right to inspect corporate books and records is

Incorporators appoint a corporation's first board of directors.

Flite-Craft Corporation makes and sells aircraft parts.In most states,the minimum number of directors that must be present before Flite-Craft's board can transact its business is

Sophie and Tiny incorporate their beverage-container business as U-Twist Products,Inc.The first board of directors may be appointed by the firm's

Fiona owns one share of stock in GR8 Boards Corporation,as evidenced by a stock certificate.Fiona loses the certificate.Her ownership of the stock is

Officers are required to exercise a reasonable amount of supervision over the corporate directors.

Only certain funds are legally available for paying dividends.

A dividend may be paid from undistributed net corporate profits.

Brad is a shareholder of Concert Promotion Corporation.As a shareholder,Brad can

Thor Power Products Corporation permits its directors to be elected by cumulative voting.This

For action to be taken during a shareholders' meeting,a forum must be present.

Shareholder voting agreements are usually held to be invalid and unenforceable.

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