Deck 16: Corporations and the Sarbanes-Oxley Act

Question 1

The shareholders of the corporation have the absolute right to amend bylaws.

Answer 1

True

Question 2

Shareholders have unlimited liable for the debt and obligations of a corporation.

Answer 2

False

Question 3

Corporations are not allowed to enter into contracts in their own name.

Answer 3

False

Question 4

An S corporation can have nonresident aliens as shareholders.

Question 5

Common stockholders receive dividends declared by the board of directors.

Question 6

An S corporation must pay federal income tax at the corporate level.

Question 7

An S corporation must pay federal income tax at the corporate level.

Question 8

An S corporation cannot have more than 100 shareholders.

Question 9

Corporation codes regulate the formation, operation, and dissolution of corporations.

Question 10

A C corporation pays taxes at the corporate level and the shareholder level.

Question 11

Shareholders of a closely held corporation play a minor role in its management.

Question 12

Amendments to the articles of incorporation must be filed with the secretary of state of the state of incorporation.

Question 13

Any corporation with more than 100 shareholders is automatically considered a C corporation for federal income tax purposes.

Question 14

A corporation can be incorporated into several states.

Question 15

Foreign corporations can elect to be taxed as an S corporation.

Question 16

A corporation is a foreign corporation in states other than the one in which it is incorporated.

Question 17

The articles of incorporation must contain the name and address of every incorporator.

Question 18

Bylaws of a corporation must be filed with a government official.

Question 19

The registered office in the articles of incorporation must be the same as the corporation's place of business.

Question 20

One of the powers of a shareholder is his or her right to elect the board of directors.

Question 21

A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is known as cumulative voting.

Question 22

Dividends are distribution of profits of the corporation to shareholders.

Question 23

Shareholders do not have to attend a shareholders' meeting to vote.

Question 24

Only outstanding shares have the right to vote.

Question 25

In case the corporation's assets are liquidated, the preferred stockholders are paid before common stockholders.

Question 26

The shareholders are responsible for determining how much will be paid in dividends.

Question 27

Secured bondholders can foreclose on the collateral in the event of nonpayment of interest.

Question 28

In debt securities, the corporation is the debtor and the holder is the creditor.

Question 29

Proxy solicitation for shareholder votes cannot be made by electronic transmission.

Question 30

Shares that are repurchased by a corporation are called unissued shares.

Question 31

The buy-and-sell agreement allows shareholders to sell their shares to people other than fellow shareholders or the corporation.

Question 32

Treasury shares cannot be issued by the corporation.

Question 33

Preferred stockholders are given the right to vote for the board of directors of the corporation.

Question 34

Once declared, a cash or property dividend cannot be revoked.

Question 35

In a voting trust, the legal titles to the shares given to the trustee are held in the name of the shareholders.

Question 36

Convertible preferred stock permits the preferred stockholders to convert their shares into common stock.

Question 37

The annual shareholders' meeting is held to elect new shareholders.

Question 38

The debt security of notes doesn't have a maturity period.

Question 39

Authorized shares that have been sold by the corporation are called issued shares.

Question 40

Shareholders of a corporation act as agents of the corporation.

Question 41

A corporation is dissolved upon the effective date of the articles of dissolution.

Question 42

Self-dealing is when shareholders use their position to deprive the board of directors of personal monetary gain.

Question 43

The business judgment rule protects shareholders for honest mistakes of judgment.

Question 44

The determination of whether a corporate director or officer has met his or her duty of care is measured in hindsight.

Question 45

The corporation that is owned by the parent corporation in a share exchange is known as the surviving corporation.

Question 46

A corporation in the state in which it was formed is referred to as a(n)________.

A) foreign corporation
B) domestic corporation
C) alien corporation
D) overseas corporation

Question 47

Which of the following entities elects members of the board of directors for a corporation?

A) the CEO
B) corporate officers
C) shareholders
D) employees

Question 48

The duty of loyalty requires directors and officers to subordinate their personal interests to those of the corporation and its shareholders.

Question 49

________ is a general rule of corporate law that provides that, generally, shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

A) Limited-purpose clause
B) Limited liability of shareholders
C) Preferred shareholder rule
D) Nonparticipating shareholder rule

Question 50

The board of directors makes policy decisions concerning the operation of a corporation.

Question 51

The election of directors of the corporation can be held by electronic transmission.

Question 52

In a share exchange, one corporation ends up owning all the shares of the other.

Question 53

A merged corporation ceases to exist after the merger.

Question 54

A corporation that uses subsidiary corporations to operate in more than one country cannot be termed as a multinational corporation.

Question 55

Usurping a corporate opportunity is a breach that can only be committed by a shareholder.

Question 56

The secret profits obtained by a director or officer cannot be recovered by a corporation.

Question 57

A merger occurs when one corporation enters into a permanent business partnership with another corporation.

Question 58

The Sarbanes-Oxley Act requires CEO and CFO certification for annual and quarterly reports.

Question 59

The ________ Act of 2002 is a federal statute enacted by Congress to improve corporate governance.

A) Brown-Kaufmann
B) Lanham
C) Glass-Steagall
D) Sarbanes-Oxley

Question 60

The president of a corporation is an example of a corporate officer.

Question 61

A detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation are referred to as ________.

A) ultra vires rules
B) articles of incorporation
C) bylaws
D) corporation codes

Question 62

________ are corporations that have many shareholders and whose securities are often traded on national stock exchanges.

A) Closely held corporations
B) Non-profit corporations
C) Publicly held corporations
D) Shore-up corporations

Question 63

Which of the following is a definition of a foreign corporation?

A) A corporation with incorporations in multiple states.
B) A corporation in the state in which it is incorporated.
C) A corporation in states other than the one in which it is incorporated.
D) A corporation in the United States which has been incorporated in another country.

Question 64

Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

A) cumulative preferred stocks
B) noncumulative preferred stocks
C) common stocks
D) participating preferred stock

Question 65

________ is a type of equity security that represents the residual value of a corporation.

A) Common stock
B) Preferred stock
C) Cumulative preferred stock
D) Participating preferred stock

Question 66

A person or corporation that is empowered to accept service of process on behalf of a corporation is referred to as a(n)________.

A) promoter
B) shareholder
C) registered agent
D) incorporator

Question 67

Securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued are known as ________.

A) authorized shares
B) preferred stocks
C) common stocks
D) fixed income securities

Question 68

A long-term debt security that is secured by some form of collateral is referred to as a ________.

A) treasury share
B) bond
C) note
D) debenture

Question 69

Which of the following is true for a corporation's incorporation in a state?

A) Domestic corporations can incorporate into only one state.
B) Domestic corporations can incorporate into all states that it conducts business in.
C) Alien corporations can only incorporate into one state.
D) Foreign corporations can incorporate into more than one state.

Question 70

Which of the following is true of treasury shares?

A) They cannot be issued by the corporation.
B) They cannot be voted by the corporation.
C) They are owned by shareholders.
D) They are paid dividends for.

Question 71

________ is the basic governing documents of a corporation which must be filed with the secretary of state of the state of incorporation.

A) Debt security
B) Debenture
C) Certificate of authority
D) Articles of incorporation

Question 72

A corporation in the United States that has been incorporated in another country is referred to as a(n)________ corporation.

A) foreign
B) domestic
C) onshore
D) alien

Question 73

Which of the following is true of an S corporation?

A) The corporation can have no more than 100 shareholders.
B) Only foreign corporations can be an S corporation.
C) They are taxed at the corporate level.
D) The corporation must be a member of an affiliated group of corporations.

Question 74

Which of the following shares have the right to vote?

A) unissued shares
B) treasury shares
C) outstanding shares
D) liquidated shares

Question 75

Which of the following criteria must be met for a company to be treated as an S corporation?

A) Shareholders must be other corporations or partnerships.
B) Nonresident aliens cannot be shareholders.
C) The corporation must have more than 100 shareholders.
D) The corporation must have more than one class of stock.

Question 76

Which of the following is true of corporate bylaws?

A) They only contain rules on how the corporation can deal with the government.
B) They are only adopted by the shareholders of the corporation.
C) They are not binding on the directors, or shareholders of the corporation.
D) They do not have to be filed with any government official.

Question 77

Issued shares that have been repurchased by the corporation are referred to as ________.

A) outstanding shares
B) liquidated shares
C) unissued shares
D) treasury shares

Question 78

Which of the following is true of a C Corporation?

A) It doesn't pay tax at the corporate level.
B) Shareholders of such a corporation don't pay tax on their dividends.
C) It must have more than 100 shareholders.
D) Nonresident aliens cannot be shareholders.

Question 79

________ is a preferred stockholder right to be paid a stated dollar amount if a corporation is dissolved and its assets redistributed.

A) Noncumulative preference
B) Cumulative dividend preference
C) Dividend preference
D) Liquidation preference

Question 80

Which of the following must be included in the articles of incorporation?

A) The minutes of the first organizational meeting of the board of directors.
B) The number of shares the corporation is authorized to issue.
C) The dissolution terms of the incorporation.
D) The corporate seal must be used in the articles of incorporation.