Deck 30: Formation and Termination of a Corporation

Question 1

The intended business activities of a corporation must be specified in its articles of incorporation.

Answer 1

True

Question 2

In a close corporation,all shares must be equally distributed among members.

Answer 2

False

Question 3

The day-to-day business of a corporation is managed by officers employed by the board of directors.

Answer 3

True

Question 4

A corporate director is an "owner" of the corporation.

Question 5

Selecting the state in which to incorporate is an important step in the incorporation procedure.

Question 6

State laws regarding corporations are uniform.

Question 7

A close corporation can operate as an S corporation.

Question 8

A de jure corporation is one that is not properly formed.

Question 9

A corporation has perpetual existence in most states unless the ar?ti?cles of incorporation state otherwise.

Question 10

A corporation does NOT possess the same right of access to the courts as citizens.

Question 11

A corporate name must include the word Corporation,Incorporated,Company,or Limited.

Question 12

A business that holds itself out as being a corporation may not deny corporate status,even if it makes no attempt to incorporate.

Question 13

An alien corporation is a corporation formed in another country.

Question 14

A corporation is an artificial being.

Question 15

A corporation whose shares are all held by a single person is called a close corporation.

Question 16

A state constitution may resolve a conflict among documents involving a corporation.

Question 17

The certificate of incorporation describes the internal rules of management for a corporation.

Question 18

A partnership cannot be a shareholder in an S corporation.

Question 19

A corporation cannot be formed without a profit-making purpose.

Question 20

The U.S.Postal Service is a public corporation.

Question 21

The date when the principal of a bond is returned to the investor is called the maturity date.

Question 22

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation.Lily and Moe are Kleen's officers.As in other corporations,the responsibility for the overall management of Kleen rests with

A)the board of directors.
B)the officers.
C)the owners.
D)the shareholders.

Question 23

A sale of all of a corporation's assets requires the approval of its shareholders.

Question 24

Skyla and Terry want to form and do business as Unique Boutique Corporation.Its existence depends generally on

A)city or county corporate codes.
B)the Entrepreneur's Corporate Handbook.
C)the federal Administrative Procedure Act.
D)state law.

Question 25

Appraisal rights are often extended to regular mergers and consolidations.

Question 26

Because of the ultra vires doctrine,shareholders are told the internal rules of corporate management.

Question 27

In a consolidation,the consolidating corporations become subsidiaries of the new corporation.

Question 28

An appraisal right is available only when a state statute specifically provides for it.

Question 29

Only a board of directors can initiate the dissolution of a corporation.

Question 30

In a short-form merger,neither corporation's shareholders need to approve the merger.

Question 31

When a sale of assets amounts to what in fact is a consolidation,the ac?quiring corporation inherits the selling corporation's liabilities.

Question 32

A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.

Question 33

Erin is a shareholder in African Adventures.As a shareholder,Erin

A)owns shares of stock in African Adventures.
B)is the founder of African Adventures.
C)has no say in the election of African Adventure's board of directors.
D)is liable for all the debts of African Adventures.

Question 34

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

Question 35

A court cannot dissolve a corporation for mismanagement.

Question 36

Pola and Quincy want to form and do business as River Tours Corporation.A corporation is owned by

A)the board of directors.
B)the officers.
C)the employees.
D)the shareholders.

Question 37

Legally,a merger and a consolidation are the same thing.

Question 38

Express powers of a corporation can be found in federal constitutions.

Question 39

In most cases,only a corporation's common stockholders need to approve a merger.

Question 40

George is the founder of Excellent Exotics Corporation.Wilson is a shareholder and director and Bill is an officer.The day-to-day operations of Excellent Exotics are overseen by

A)Bill.
B)Wilson.
C)George.
D)George and Wilson.

Question 41

Wiley incorporates his business as Wiley Wire Corporation in Texas.He and his group of shareholders intend to make a profit from their sales of fencing wire.Wiley Wire Corporation is

A)a nonprofit corporation.
B)not a corporation.
C)an alien corporation.
D)a private corporation.

Question 42

Memphis Music Makers Incorporated has a stated purpose to sell musical instruments.If chief executive officer Tabitha contracts with Frenzied Firearms in Memphis Music Makers's name to sell a shotgun,she has likely committed

A)an ultra vires act.
B)a de facto act.
C)a de jure act.
D)a legal act.

Question 43

Eagle Financial Corporation merges with First Bank Corporation,with Eagle Financial absorbing First Bank.After the merger

A) a different,new corporation is the surviving corporation.
B) Eagle Financial and First Bank are both surviving corporations.
C) Eagle Financial is the surviving corporation.
D) First Bank is the surviving corporation.

Question 44

O.K.Oil holds itself out to others as being a corporation but makes no attempt to incorporate.In this circumstance,O.K.is most likely

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

Question 45

Eye Appliance Company and Fast Courier,Inc.,wish to combine all of their assets,stock,and personnel into a new firm to be called Glasses2Go Corporation.This is

A)a consolidation.
B)a merger.
C)an exchange of assets.
D)a takeover.

Question 46

The articles of incorporation for a corporation do NOT include

A)the corporate name.
B)the nature and purpose of the corporation.
C)the capital structure of the corporation.
D)the minutes of the first organizational meeting.

Question 47

Eager Beaver Corporation fails to hold an organizational meeting.In this circumstance,Eager Beaver is most likely

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

Question 48

Ruby Red Corporation is incorporated in South Carolina.In that state,Ruby Red is

A)a domestic corporation.
B)a foreign corporation.
C)an alien corporation.
D)a non-entity.

Question 49

Painless Dental Equipment Company is incorporated in Colorado.In Wyoming,Painless is

A)a domestic corporation.
B)a foreign corporation.
C)an alien corporation.
D)a non-entity.

Question 50

Like the bylaws of other corporations,the bylaws of Retail Sales,Inc.,

A)establish the operating name of the corporation.
B)establish the value and classes of corporate stock.
C)were adopted at its first organizational meeting.
D)were submitted for approval to the public official in charge.

Question 51

Smalltown,Alabama is incorporated by the government.Smalltown is

A)a foreign corporation.
B)a public corporation.
C)a private corporation.
D)an alien corporation.

Question 52

When a conflict arises among the documents that involve Fast Flights Corporation,the first priority for resolving the conflict is given to

A)resolutions of the board of directors.
B)Fast Flights's bylaws.
C)state statues.
D)the U.S.Constitution.

Question 53

Boutique Corporation would like to change its corporate status to that of an S corporation to avoid in?come taxes at the corporate level.To qualify,the shareholders must not be

A)corporations.
B)estates.
C)individuals.
D)partnerships.

Question 54

Lyla is a common shareholder in Norman's Nutty Nuts Corporation.As a common shareholder,Lyla is

A)guaranteed regular payments of dividends.
B)not guaranteed any payments of dividends.
C)not given any voting rights.
D)liable for all of Norman's Nutty Nuts's debts.

Question 55

Finn and Glenda want to form and do business as Hobby Crafts Corporation.A corporation is

A)a natural person.
B)a tangible thing.
C)an artificial being.
D)a visible radiance.

Question 56

Luke is an owner of Lucky Luke's Corporation.Luke uses the corporate entity of Lucky Luke's to perpetuate fraud.In this case,a court is likely to expose Luke to personal liability by

A)piercing the corporate veil.
B)issuing a de facto judgment.
C)issuing a de jure judgment.
D)issuing a ultra vires judgment.

Question 57

Superior Home Products,Inc.,is a corporation.Superior's implied powers enable it to

A)amend the articles of incorporation.
B)bring a derivative suit.
C)declare dividends.
D)borrow funds,extend credit,and make charitable contributions.

Question 58

Stan incorporates his scientific products business as Tech Supply,Inc.Under most state corporation statutes,Tech Supply can have

A)only a finite,yet-to-be-determined existence.
B)only a one-year,nonrenewable existence.
C)only a one-year,renewable existence.
D)perpetual existence.

Question 59

A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate for a purpose other than making a profit.SDC is

A)a foreign corporation.
B)an alien corporation.
C)a nonprofit corporation.
D)not a corporation.

Question 60

DVD Rental Corporation would like to change its corporate status to that of an S corporation to avoid in?come taxes at the corporate level.To qualify,DVD Rental Corporation must

A)be located in the United States.
B)have more than one hundred shareholders.
C)be a non-profit corporation.
D)have more than one class of stock.

Question 61

Salt Corporation wants to acquire or merge with Pepper Corporation.Salt should

A)file a plan of merger with the secretary of state.
B)file an article of merger with Pepper.
C)make a tender offer to the shareholders of Pepper.
D)make a tender offer to the shareholders of Salt.

Question 62

Brock is a shareholder of Competent Homebuilders Corporation (CHC).For the last few years,business has not been profitable for CHC.The firm has lost money on its operations.There has been some profit through sales of company assets,but the board of directors has refused to declare a dividend.This last year,the firm's accountants failed to file fed?eral in?come tax returns and the board refused to pay the tax.Brock takes a close look at the firm and protests to the board,in particular over the fail?ure to declare a dividend,but the board ignores the complaint.Which of these events,if any,would form a ground for a court to order the dissolu?tion of CHC,on Brock's petition? If the court denies the petition,could Brock and the other shareholders dissolve CHC?

Question 63

Starr Cardio,Inc.,is a small business.Ted,Uma,and eleven other members of the Starr family own all of its stock.Currently,Starr's income is taxed at the corporate level and,after being distributed to the family members,at the shareholder level.Can Starr retain its corporate status but oth?er?wise avoid this double taxation? If so,how?

Question 64

Precise Device Corporation and Quality Instruments,Inc.,decide to merge.This corporate combination does not require the approval of

A)Precise and Quality's directors.
B)Precise and Quality's officers and employees.
C)Precise's shareholders.
D)Quality's shareholders.

Question 65

Realty Credit Company and Second Mortgage Corporation plan to con?solidate.Most likely,the articles of consolidation will be filed with

A)the county recording office.
B)the Securities and Exchange Commission.
C)the state's secretary of state.
D)the U.S.Department of Justice.

Question 66

Jen files a suit against Kopper Kettle Company.While the suit is pending,Kopper Kettle merges with Luminous Pans,Inc.,with Luminous absorbing Kopper Kettle.Now,liability in the suit,if any,rests with

A) Jen.
B) Kopper Kettle.
C) Luminous.
D)no one.

Question 67

Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.With respect to Heavy Hydraulics's liabilities,Giant Lift is

A)automatically responsible.
B)not responsible under any circumstances.
C)responsible if Heavy Hydraulics is a competitor of Giant Lift.
D)responsible if the sale is in fact a merger or consolidation.

Question 68

Sangfroid Business Corporation can be compelled to dissolve by

A)its creditors only.
B)itself,through its shareholders and directors,only.
C)itself,through its shareholders and directors,or the state.
D)the state only.

Question 69

Ruff Games,Inc.,wishes to ac?quire a controlling interest in Smart Toy Com?pany by buying its stock.Smart Toy is

A)an alien corporation.
B)an acquiring corporation.
C)a receiver.
D)a target corporation.

Question 70

Corporate Properties,Inc.,attempts to acquire a substantial number of the shares of Downtown Realty Corporation through a public offer to Downtown's shareholders.This is

A)a consolidation.
B)a tender offer.
C)a short-form merger.
D)a termination.

Question 71

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.Mall Stores combines with Niche Retail,but only Mall Stores continues to exist.This transaction was

A)a consolidation.
B)a tender offer.
C)a short-form merger.
D)a termination.

Question 72

Raven is a shareholder of Quantum Mechanix Corporation.Raven could normally ex?er?cise appraisal rights if Quantum participated in

A)a consolidation.
B)a dissolution.
C)a liquidation.
D)a winding up.