Question 1

A publicly held corporation is any corporation whose shares are publicly traded in a securities market.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Qiara is a holder of preferred stock in Rio Grande Irrigation & Development, Inc. Qiara has priority over holders of Rio common stock as to

Accepted Answer

A)   nothing.
B)   payments of dividends.
C)   the date on which Rio must repurchase the shares.
D)   upward changes in the market price of the shares.E) A) and D)
F) A) and C)

Question 4

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

Accepted Answer

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.E) C) and D)
F) A) and C)

Question 5

In the absence of express constitutional, statutory, or other provisions, the corporation has no implied powers.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   corporations.
B)   estates.
C)   individuals.
D)   partnerships.E) B) and C)
F) A) and D)

Question 7

Olinka is a registered agent for Pads, Pods & Phones, Inc., which incorporated in California. As a registered agent, Olinka

Accepted Answer

A)   agreed to buy stock in Pads, Pods & Phones before it existed.
B)   applied to California on behalf of Pads, Pods & Phones to obtain its corporate charter.
C)   represents Pads, Pods & Phones as a marketing agent.
D)   receives legal documents on behalf of Pads, Pods & Phones.E) A) and B)
F) A) and C)

Question 8

A corporation whose shares are held by relatively few persons is a close corporation.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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.E) C) and D)
F) A) and D)

Question 10

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

Accepted Answer

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

Question 11

A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Breads & Brews, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of

Accepted Answer

A)   each of the corporation's incorporators.
B)   each of the corporation's shareholders.
C)   the corporation.
D)   the corporation's initial registered agent.E) None of the above
F) A) and B)

Question 14

Perfect Tone Phones, Inc. is a corporation. Perfect Tone's implied powers enable it to

Accepted Answer

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

Question 15

Urban Commerce, Inc., issues bonds, which are also known as

Accepted Answer

A)   cumulative investments.
B)   fixed-income securities.
C)   equity securities.
D)   preferred stock.E) B) and C)
F) A) and C)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Bay City Merchants Corporation has six shareholders, four of whom are members of the same family. All of Bay City's shareholders agree in writing to operate without shareholders' meetings. Under the Revised Model Business Corporation Act, this most likely warrants

Accepted Answer

A)   no penalties or sanctions.
B)   the imposition of a fine on Bay City.
C)   the imprisonment of Bay City's shareholders.
D)   the piercing of Bay City's corporate veil.E) B) and C)
F) None of the above

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The articles of Equestrian Stables Inc. list an incorrect address for its incorporator. Under this circumstance, Equestrian Stables is most likely

Accepted Answer

A)   a corporation by estoppel.
B)   a de facto corporation.
C)   a de jure corporation.
D)   ultra vires.E) A) and B)
F) All of the above

Exam 34: Corporate Formation and Financing

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

Correct AnswerverifiedShow Answer

A corporation whose shares are held by relatively few persons is a close corporation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bay City Merchants Corporation has six shareholders, four of whom are members of the same family. All of Bay City's shareholders agree in writing to operate without shareholders' meetings. Under the Revised Model Business Corporation Act, this most likely warrants

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Qiara is a holder of preferred stock in Rio Grande Irrigation & Development, Inc. Qiara has priority over holders of Rio common stock as to

Correct AnswerverifiedShow Answer

The articles of Equestrian Stables Inc. list an incorrect address for its incorporator. Under this circumstance, Equestrian Stables is most likely

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Breads & Brews, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A publicly held corporation is any corporation whose shares are publicly traded in a securities market.

Correct AnswerverifiedShow Answer

Perfect Tone Phones, Inc. is a corporation. Perfect Tone's implied powers enable it to

Correct AnswerverifiedShow Answer

Urban Commerce, Inc., issues bonds, which are also known as

Correct AnswerverifiedShow Answer

In the absence of express constitutional, statutory, or other provisions, the corporation has no implied powers.

Correct AnswerverifiedShow Answer

Olinka is a registered agent for Pads, Pods & Phones, Inc., which incorporated in California. As a registered agent, Olinka

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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