Question 1

Every form of business organization is a legal entity separate and distinct from its owner or owners.

Accepted Answer

A) True 
 B)False

Question 2

To avoid potential liability for misconduct in corporate operations, directors can refrain from reasonable supervision of work delegated to

Accepted Answer

A)   corporate officers.
B)   corporate employees.
C)   board committees.
D)   none of the choices.E) B) and D)
F) A) and B)

Question 3

To bring a corporation into existence requires securing a corporate name that

Accepted Answer

A)   is the same or deceptively similar to the name of an existing corporation.
B)   is selected by the state of incorporation, for convenience and cost.
C)   promises to attract financial support from investors.
D)   is available as a domain name, subject to state approval.E) B) and D)
F) C) and D)

Question 4

Sweetwater Corporation is incorporated in Texas. Outside that state, within the United States, the firm is

Accepted Answer

A)   a domestic corporation.
B)   a foreign corporation.
C)   an alien corporation.
D)   a corporation by estoppel.E) None of the above
F) A) and C)

Question 5

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

Accepted Answer

A)   a benefit corporation.
B)   a publicly held corporation.
C)   no corporation-corporate shareholders' liability is limited.
D)   a close corporation.E) C) and D)
F) All of the above

Question 6

The management of any form of business organization is completely at the owners' discretion and does not affect liability for the firm's obligations.

Accepted Answer

A) True 
 B)False

Question 7

With respect to a corporation, an officer's rights are defined by

Accepted Answer

A)   employment contracts.
B)   state statutes.
C)   court review.
D)   shareholder votes.E) A) and B)
F) None of the above

Question 8

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes

Accepted Answer

A)   harassment.
B)   unreasonable access to trade secrets and other confidential information.
C)   a proper purpose.
D)   potential abuse.E) A) and C)
F) All of the above

Question 9

If a director commits a breach of fiduciary duty, the shareholders have the inherent power to remove the director from office by a majority vote.

Accepted Answer

A) True 
 B)False

Question 10

A corporate officer is liable to the corporation or its shareholders for a bad business decision.

Accepted Answer

A) True 
 B)False

Question 11

Rex forms Shell Company to assume debts that he does not wish to pay. The firm is not intended to make a profit, and Rex does not provide it with sufficient capital. This most likely warrants

Accepted Answer

A)   tricking Rex into disclosing Shell's true purpose to Rex's creditors.
B)   recognizing Shell as a de facto corporation.
C)   piercing Shell's corporate veil.
D)   requiring Rex to commingle his personal funds and Shell's funds.E) A) and B)
F) A) and C)

Question 12

Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of

Accepted Answer

A)   the duty of care.
B)   the business judgment rule.
C)   the duty of loyalty.
D)   none of the choices.E) A) and B)
F) A) and C)

Question 13

If a business says it is a corporation, and a third party deals with it as a corporation, neither party can question the validity of the business's status.

Accepted Answer

A) True 
 B)False

Question 14

A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal, even though the firm is not yet formed, because the nature of investment is risk.

Accepted Answer

A) True 
 B)False

Question 15

To pierce the corporate veil is to disregard the corporate entity and hold the directors liable for a corporate obligation.

Accepted Answer

A) True 
 B)False

Question 16

A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.

Accepted Answer

A) True 
 B)False

Question 17

Doris wants to form a new firm-eBeats-to market a new app. Fees are required to form all of the following business organizations except

Accepted Answer

A)   a sole proprietorship.
B)   a corporation.
C)   a limited partnership.
D)   a limited liability company.E) None of the above
F) B) and D)

Question 18

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

Accepted Answer

A)   a corporate resolution.
B)   a cumulative vote.
C)   a proxy.
D)   a quorum requirement.E) B) and C)
F) All of the above

Question 19

Market Data Corporation's articles list an incorrect address for its incorporator. Under this circumstance, Market Data 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) C) and D)

Question 20

All forms of business organizations limit the liability of their owners.

Accepted Answer

A) True 
 B)False

Exam 18: Corporations

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

Correct AnswerverifiedShow Answer

The management of any form of business organization is completely at the owners' discretion and does not affect liability for the firm's obligations.

Correct AnswerverifiedShow Answer

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes

Correct AnswerverifiedShow Answer

To bring a corporation into existence requires securing a corporate name that

Correct AnswerverifiedShow Answer

With respect to a corporation, an officer's rights are defined by

Correct AnswerverifiedShow Answer

All forms of business organizations limit the liability of their owners.

Correct AnswerverifiedShow Answer

A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal, even though the firm is not yet formed, because the nature of investment is risk.

Correct AnswerverifiedShow Answer

Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of

Correct AnswerverifiedShow Answer

Doris wants to form a new firm-eBeats-to market a new app. Fees are required to form all of the following business organizations except

Correct AnswerverifiedShow Answer

Market Data Corporation's articles list an incorrect address for its incorporator. Under this circumstance, Market Data is most likely

Correct AnswerverifiedShow Answer

Sweetwater Corporation is incorporated in Texas. Outside that state, within the United States, the firm is

Correct AnswerverifiedShow Answer

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

Correct AnswerverifiedShow Answer

A corporate officer is liable to the corporation or its shareholders for a bad business decision.

Correct AnswerverifiedShow Answer

If a business says it is a corporation, and a third party deals with it as a corporation, neither party can question the validity of the business's status.

Correct AnswerverifiedShow Answer

To avoid potential liability for misconduct in corporate operations, directors can refrain from reasonable supervision of work delegated to

Correct AnswerverifiedShow Answer

To pierce the corporate veil is to disregard the corporate entity and hold the directors liable for a corporate obligation.

Correct AnswerverifiedShow Answer

Rex forms Shell Company to assume debts that he does not wish to pay. The firm is not intended to make a profit, and Rex does not provide it with sufficient capital. This most likely warrants

Correct AnswerverifiedShow Answer

Every form of business organization is a legal entity separate and distinct from its owner or owners.

Correct AnswerverifiedShow Answer

If a director commits a breach of fiduciary duty, the shareholders have the inherent power to remove the director from office by a majority vote.

Correct AnswerverifiedShow Answer

A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified