Question 1

A corporation is an artificial being.

Accepted Answer

True

Question 2

State laws regarding corporations are uniform.

Accepted Answer

False

Question 3

A corporation does not possess the same right of access to the courts as natural persons.

Accepted Answer

False

Question 4

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

Accepted Answer

True

Question 5

An alien corporation is a corporation formed in another country.

Accepted Answer

True

Question 6

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

Accepted Answer

True

Question 7

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

Accepted Answer

False

Question 8

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

Accepted Answer

True

Question 9

A close corporation can operate as an S corporation.

Accepted Answer

True

Question 10

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

Accepted Answer

True

Question 11

A corporate name must include the word Corporation, Incorporated, Company, or Limited, or abbreviations of these terms.

Accepted Answer

True

Question 12

Bylaws are the internal rules of management for a corporation.

Accepted Answer

True

Question 13

A de jure corporation is one that has substantially complied with all requirements for incorporation.

Accepted Answer

True

Question 14

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

Accepted Answer

True

Question 15

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

Accepted Answer

True

Question 16

A board of directors governs every corporation.

Accepted Answer

True

Question 17

A corporation\'s officers and other executive employees are hired by corporate shareholders

Accepted Answer

False

Question 18

The minimum number of members of a body of officials that must be present before business can validly be transacted is known as a quorum.

Accepted Answer

True

Question 19

Quorum requirements are the same in all jurisdictions.

Accepted Answer

False

Question 20

A corporate officer cannot act as an agent of the corporation.

Accepted Answer

False

Question 21

Corporate officers can usually be removed by the board of directors without cause.

Accepted Answer

True

Question 22

A director is a fiduciary of a corporation.

Accepted Answer

True

Question 23

Corporate directors and officers are insurers of business success.

Accepted Answer

False

Question 24

Directors can use corporate funds and confidential information for personal advantage as long as they disclose that they are doing so.

Accepted Answer

False

Question 25

A director does not need to disclose any conflict of interest before voting on a proposal.

Accepted Answer

False

Question 26

The articles of corporation cannot exclude or limit shareholders\' voting rights.

Accepted Answer

False

Question 27

Cumulative voting refers to the accumulation of proposals presented annually for a shareholders\' vote.

Accepted Answer

False

Question 28

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

Accepted Answer

False

Question 29

In certain instances of fraud, a court may \"pierce the corporate veil\" to hold the shareholders individually liable.

Accepted Answer

True

Question 30

A merger and a consolidation are not two legally distinct proceedings.

Accepted Answer

False

Question 31

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

Accepted Answer

False

Question 32

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

Accepted Answer

True

Question 33

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

Accepted Answer

False

Question 34

When dissolution takes place by voluntary action, the shareholders are responsible for winding up the affairs of the corporation.

Accepted Answer

False

Question 35

A court can not dissolve a corporation for mismanagement.

Accepted Answer

False

Question 36

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.

Accepted Answer

d.  state law.

Question 37

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.

Accepted Answer

a.  the board of directors.

Question 38

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  a.  Bill.  b.  Wilson.  c.  George.  d.  George and Wilson.

Accepted Answer

a.  Bill.

Question 39

Jean and Olivia want to form and do business as Cake Cups Corporation. A corporation is  a.  a natural person.  b.  a tangible thing.  c.  an artificial legal person.  d.  a visible radiance.

Accepted Answer

c.  an artificial legal person.

Question 40

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.

Accepted Answer

a.  a domestic corporation.

Question 41

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.

Accepted Answer

b.  a foreign corporation.

Question 42

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.

Accepted Answer

d.  a private corporation.

Question 43

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.

Accepted Answer

b.  a public corporation.

Question 44

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.

Accepted Answer

c.  a nonprofit corporation.

Question 45

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

Accepted Answer

a.  be located in the United States.

Question 46

Myron and Norah would like to form Originals, Inc., to do business in the art market. Generally, 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.

Accepted Answer

d.  the minutes of the first organizational meeting.

Question 47

Perfect Tone Phones, Inc., is a corporation. Perfect Tone\'s implied powers enable it to  a.  amend the articles of incorporation.  b.  bring a derivative suit.  c.  declare dividends.  d.  borrow funds, lend funds, and extend credit.

Accepted Answer

d.  borrow funds, lend funds, and extend credit.

Question 48

When a conflict arises among the documents that involve Express Flights Corporation, the first priority for resolving the conflict is given to  a.  resolutions of the board of directors.  b.  Express Flights\'s bylaws.  c.  state statues.  d.  the U.S. Constitution.

Accepted Answer

d.  the U.S. Constitution.

Question 49

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.

Accepted Answer

b.  not guaranteed any payments of dividends

Question 50

Rhea is a director of Spex Corporation, which makes and sells sunglasses and other eyewear. As a Spex director, Rhea sits on the board, which  a.  governs Spex.  b.  is governed by the Spex incorporators.  c.  is governed by the Spex officers.  d.  is governed by the Spex shareholders.

Accepted Answer

a.  governs Spex.

Question 51

Great Gates, Inc. has a board of ten directors. Great Gates\' bylaws do not state any quorum requirements. In most states, a quorum for Great Gates will be defined as  a.  two directors.  b.  six directors.  c.  nine directors.  d.  ten directors.

Accepted Answer

b.  six directors.

Question 52

RayAnn is a corporate officer for Timmy\'s Trees, Inc. As a corporate officer, RayAnn is  a.  the head of the board of directors.  b.  involved in the day-to-day operations of Timmy\'s Trees.  c.  not involved in the day-to-day operations of Timmy\'s Trees.  d.  in charge of selecting members of the board of directors.

Accepted Answer

b.  involved in the day-to-day operations of Timmy\'s Trees.

Question 53

Nina is a director of Omega, Inc. Under the standard of due care owed by directors of a corporation, Nina\'s decisions must be  a.  ambiguous and questionable.  b.  arguable and defensible.  c.  informed and reasonable.  d.  perfect and unassailable.

Accepted Answer

c.  informed and reasonable.

Question 54

Odell is a director of Price Rite, Inc. As a director, with respect to the corporation, Odell is  a.  a fiduciary.  b.  a forum.  c.  a proxy.  d.  a quorum.

Accepted Answer

a.  a fiduciary.

Question 55

Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coast\'s employees include its  a.  board of directors.  b.  incorporators.  c.  officers.  d.  shareholders.

Accepted Answer

c.  officers.

Question 56

Rafi, a director of Super Service Station Corporation, does not attend a board meeting for three years. During that time, Twyla, Super\'s president, makes improper loans that cost the company $100,000. Rafi is most likely  a.  liable for negligence or mismanagement.  b.  liable for violation of the business judgment rule.  c.  not liable because missing meetings is an honest mistake.  d.  not liable because missing meetings is only poor judgment.

Accepted Answer

a.  liable for negligence or mismanagement.

Question 57

Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery Corporation. As directors, they may not  a.  authorize major corporate policy decisions.  b.  decide to issue stock and bonds, and declare dividends.  c.  select and remove corporate officers.  d.  subordinate the corporation\'s welfare to their personal interests.

Accepted Answer

d.  subordinate the corporation\'s welfare to their personal interests.

Question 58

Josh is a director of Sippy Soups, Inc. Josh opposes a tender offer that is in Sippy\'s best interest because its acceptance would cost him his position as a director. Josh is liable for a breach of duty of  a.  no duty or rule.  b.  the business judgment rule.  c.  the duty of care.  d.  the duty of loyalty.

Accepted Answer

d.  the duty of loyalty.

Question 59

Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into business with GR8 Things, Inc., in competition with Trendy. Etta is liable for breach of  a.  no duty or rule  b.  the business judgment rule.  c.  the duty of care.  d.  the duty of loyalty.

Accepted Answer

d.  the duty of loyalty.

Question 60

Louise is a director for Icy Ices, Inc. Louise is also a director for Creamy Creams, Inc. When Icy Ices enters into a contract with Creamy Creams, Louise  a.  must resign from one of the boards.  b.  must resign from both boards.  c.  must make a full disclosure of any conflicts of interest and abstain from voting on the proposed transaction.  d.  need not do anything.

Accepted Answer

c.  must make a full disclosure of any conflicts of interest and abstain from voting on the proposed transaction.

Question 61

Rosa and Sean are directors of Tech, Inc. Rosa\'s written authorization to Sean to vote Rosa\'s shares at a Tech shareholders\' meeting is  a.  a violation of the duty of care.  b.  a preemptive right.  c.  a proxy.  d.  a quorum.

Accepted Answer

c.  a proxy.

Question 62

DeFazio\'s Italian Restaurants, Inc., holds a shareholders\' meeting. Corporate business matters are presented at the meeting in the form of  a.  resolutions.  b.  proxies.  c.  articles of incorporation.  d.  bylaws.

Accepted Answer

a.  resolutions.

Question 63

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

Accepted Answer

a.  allows minority shareholders to be represented on the board.

Question 64

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.

Accepted Answer

c.  Eagle Financial is the surviving corporation.

Business Law Pretests Ch.20 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards