Question 1

One of the key advantages of the corporate form is the unlimited liability of its owners.

Accepted Answer

FALSE

Question 2

The state can suspend the entity\'s corporate status until the taxes are paid or even dissolve the corporation for failing to pay taxes

Accepted Answer

TRUE

Question 3

A foreign corporation normally does not need a certificate of authority to sell goods or services via the Internet or by mail.

Accepted Answer

TRUE

Question 4

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

Accepted Answer

TRUE

Question 5

If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level

Accepted Answer

TRUE

Question 6

The articles of incorporation serve as a primary source of authority for the corporation\'s future organization and business functions

Accepted Answer

TRUE

Question 7

The registered agent is the person who can receive legal punishment (such as fines and imprisonment) on behalf of the corporation

Accepted Answer

FALSE

Question 8

There are no important consequences if the procedures for incorporation are not followed precisely.

Accepted Answer

FALSE

Question 9

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

Accepted Answer

FALSE

Question 10

In corporate law, acts of a corporation that are beyond its express or implied powers are de facto or de jure acts.

Accepted Answer

FALSE

Question 11

Most states do not permit the corporate articles or bylaws to authorize compensation for directors.

Accepted Answer

FALSE

Question 12

A director who does not hold a management position in the corporation is an outside director

Accepted Answer

TRUE

Question 13

Each director present at a meeting of the board of directors has one vote for each outstanding share of corporate stock that he or she holds.

Accepted Answer

FALSE

Question 14

In most states, an individual cannot hold more than one corporate office and be both an officer and a director of the corporation.

Accepted Answer

FALSE

Question 15

Directors are prevented from ever having financial dealings with the corporations they serve

Accepted Answer

FALSE

Question 16

Shareholders own the corporation, and they have legal title to corporate property

Accepted Answer

FALSE

Question 17

Shareholders have the power to vote to elect or remove members of the board of directors.

Accepted Answer

TRUE

Question 18

A straight majority vote of the shares represented at a shareholders\' meeting is usually required to pass resolutions.

Accepted Answer

TRUE

Question 19

Dividends can be paid from the undistributed net profits earned by the corporation.

Accepted Answer

TRUE

Question 20

Restrictions on the transfer of shares in a close corporation are usually void.

Accepted Answer

FALSE

Question 21

Demario and Evander want to form and do business as a corporationâFarm-2-Fork Restaurant Inc. A corporation is

Accepted Answer

an artificial person

Question 22

The shares of Home Mortgage Corporation are publicly traded in securities marÂ¬kets. Home Mortgage Corporation is

Accepted Answer

a publicly held corporation

Question 23

Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing busiÂ¬ness in the state of New York. In New York, Dollars & Sense is properly referred to as

Accepted Answer

a foreign corporation

Question 24

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

Accepted Answer

a private corporation

Question 25

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

Accepted Answer

partnerships

Question 26

Tech Personnel, Inc., is a corporation. Tech Personnel\'s implied powers enable it to

Accepted Answer

borrow funds and lend funds

Question 27

Memphis Music Makers Inc.\'s stated purpose is to sell musical instruments. If chief executive officer Neal contracts with Open Season Firearms in Memphis Music\'s name to sell a shotgun, he has likely committed

Accepted Answer

an ultra vires act

Question 28

Godwin is a director on the board of Health Insurance Corporation. On the receipt of notice of a board meeting, Godwin attends the meeting and takes part in the discussion of business matters and votes on corporate issues. Godwin is entitled to be notified of, and to take part in, these meetings

Accepted Answer

under the director\'s right to participation

Question 29

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

incorporators

Question 30

Alain is chairman of the board of Barber & Beauty Supply Corporation. Consuela, a conÂ¬sumer, is injured while using a Barber & Beauty product. She sues Barber & Beauty and Alain individuÂ¬ally. The corporation may pay Alain\'s legal fees under

Accepted Answer

under the director\'s right to indemnification

Question 31

Renee is a director of Sharp Focus Lens Corporation. With respect to Sharp Focus, Renee can access the corporation\'s books and records. Renee has this access under

Accepted Answer

the director\'s right of inspection.

Question 32

Lewis is a director of Mines & Refineries, Inc. Using information that is not available to the public, Lewis makes a profit trading in Mines & Refineries stock. Lewis is most likely liÂ¬able for breach of

Accepted Answer

the duty of loyalty

Question 33

Eloise is a director for Frozen Yogurt Company. Eloise is also a director for Gelato Desserts, Inc. When the board of Frozen Yogurt considers entering into a contract with Gelato Desserts, Eloise must

Accepted Answer

make a full disclosure of any conflict of interest

Question 34

Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve

Accepted Answer

conducting a merger

Question 35

Misha and Nguyen are shareholders of Outsourcing Solutions, Inc. Misha\'s written authorization to Nguyen to vote her shares at a shareholders\' meeting is

Accepted Answer

a proxy

Question 36

Mieko is a shareholder of Natural Gas, Inc. Natural Gas uses cumulative voting to elect directors. This means that the number of Mieko\'s votes is determined by the number of

Accepted Answer

members of the board to be elected multiplied by the total number of voting shares that Mieko holds

Question 37

Reed owns one share of stock in SK8 Boards Corporation, as evidenced by a stock certificate. Reed loses the certificate. Reed\'s ownership of the stock is

Accepted Answer

not affected

Question 38

Lovey is a shareholder of Made-2-Order Manufacturing Corporation with preemptive rights. With these rights, Lovey can

Accepted Answer

buy a prorated share of a new issue of stock before other buyers

Question 39

Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A shareholders\' meeting takes place before Max\'s ownership is entered in Lone Starz\'s stock book. A vote at the meeting can be cast by

Accepted Answer

Kelly only

Question 40

Orsa is a shareholder in Pickles & Preserves Corporation. In some states, Orsa may be liable to the firm\'s creditors for unpaid corporate debts if she

Accepted Answer

receives shares issued by the firm for less than fair-market value

BUL-4310 Final, Ch. 19 – Flashcards

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