Chapter 20 study guide – Flashcards
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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.
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D
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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.
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A
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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.
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A
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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.
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C
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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.
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A
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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.
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B
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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.
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D
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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
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B
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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.
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C
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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.
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A
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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.
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A
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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.
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B
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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.
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B
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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.
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C
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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.
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A
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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.
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C
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Rafi, a director of Super Service Station Corporation, does not attend a board meet¬ing 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.
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A
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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.
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D
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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.
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D
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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.
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D
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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.
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C
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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.
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C
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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.
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A
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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.
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A
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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.
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C
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Eye Appliance Company and Fresh Views, Inc., wish to combine all of their assets, stock, and personnel into a new firm to be called Goggles Corporation. This is a. a consolidation. b. a merger. c. an exchange of assets. d. a takeover.
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A
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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.
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C
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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.
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B
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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.
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C
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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
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C
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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.
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D
