Question 1

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions related to corporate affairs lies with Metro's

Accepted Answer

A)  board of directors.
B)  high-level managers.
C)  chief executive officer.
D)  shareholders.E) A) and B)
F) B) and C)

Question 2

The day-to-day operations of a corporation are overseen by

Accepted Answer

A)  the directors.
B)  the officers.
C)  the owners.
D)  the shareholders.E) B) and C)
F) A) and B)

Question 3

A corporate director is not liable to the corporation or its shareholders for an honest mistake of judgment.

Accepted Answer

A) True 
 B)False

Question 4

Cattle Ranch Inc. is a for-profit corporation that is owned by six shareholders who are members of the same family. Cattle Ranch is

Accepted Answer

A)  an S corporation.
B)  a close corporation.
C)  a benefit corporation.
D)  a public corporation and a private corporation.E) All of the above
F) A) and C)

Question 5

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

Accepted Answer

A)  apply the "don't ask, don't tell" rule of personal conduct.
B)  use the situation to his personal advantage.
C)  make a full disclosure of the conflict of interest.
D)  none of the choices.E) C) and D)
F) A) and B)

Question 6

Liability for negligence in the performance of corporate duties may extend to

Accepted Answer

A)  directors only.
B)  officers only.
C)  directors and officers.
D)  none of the choices.E) A) and B)
F) A) and C)

Question 7

A corporation is not liable for the misconduct of its agents or officers.

Accepted Answer

A) True 
 B)False

Question 8

The board of directors conducts business by holding formal meetings with recorded minutes.

Accepted Answer

A) True 
 B)False  True

Question 9

Sara and Tim form Urban Foods Inc. When it comes to managing Urban, the firm relies on

Accepted Answer

A)  the board of directors.
B)  the business judgment rule.
C)  the officers.
D)  the chief executive officer.E) A) and B)
F) C) and D)

Question 10

If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence, the shareholders can challenge the election in court.

Accepted Answer

A) True 
 B)False

Question 11

Most likely to appear in the articles of incorporation are the names of the company's initial

Accepted Answer

A)  officers and employees.
B)  shareholders and creditors.
C)  market and competitors.
D)  registered office and agent.E) A) and C)
F) None of the above

Question 12

The first step in the incorporation of a business firm is to

Accepted Answer

A)  identify the appropriate market and adopt a business plan.
B)  select the state of incorporation.
C)  secure promises of financial support from potential investors.
D)  hold the first organizational meeting.E) C) and D)
F) B) and D) B

Question 13

If the procedures for incorporation are not followed precisely, others may be able to challenge the existence of the corporation.

Accepted Answer

A) True 
 B)False  True

Question 14

Because of their positions within the corporation, directors must make full disclosure of any conflicts of interest with respect to corporate contracts.

Accepted Answer

A) True 
 B)False

Question 15

Apt Adapt Inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effects of climate change. The stated purpose is to have a material positive impact on society and the environment, and to make a profit. Apt Adapt is

Accepted Answer

A)  a nonprofit corporation.
B)  not a corporation.
C)  a benefit corporation.
D)  a public corporation.E) C) and D)
F) A) and B)

Question 16

A corporation's authority to act and its liability for those actions is, with respect to the firm's owners,

Accepted Answer

A)  proportional.
B)  one and the same.
C)  joint and several.
D)  separate and apart.E) None of the above
F) B) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Because of their positions within the corporation, directors cannot be held personally liable for violations of statutes enacted to protect the environment.

Accepted Answer

A) True 
 B)False

Question 19

To focus on individual subjects and increase efficiency, a corporate board can delegate certain tasks to committees of directors.

Accepted Answer

A) True 
 B)False

Question 20

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) C) and D)
F) B) and C)

Exam 37: Corporate Formation and Financing

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions related to corporate affairs lies with Metro's

Correct AnswerverifiedShow Answer

The day-to-day operations of a corporation are overseen by

Correct AnswerverifiedShow Answer

A corporate director is not liable to the corporation or its shareholders for an honest mistake of judgment.

Correct AnswerverifiedShow Answer

Cattle Ranch Inc. is a for-profit corporation that is owned by six shareholders who are members of the same family. Cattle Ranch is

Correct AnswerverifiedShow Answer

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

Correct AnswerverifiedShow Answer

Liability for negligence in the performance of corporate duties may extend to

Correct AnswerverifiedShow Answer

A corporation is not liable for the misconduct of its agents or officers.

Correct AnswerverifiedShow Answer

The board of directors conducts business by holding formal meetings with recorded minutes.

Correct AnswerverifiedTrue

Sara and Tim form Urban Foods Inc. When it comes to managing Urban, the firm relies on

Correct AnswerverifiedShow Answer

If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence, the shareholders can challenge the election in court.

Correct AnswerverifiedShow Answer

Most likely to appear in the articles of incorporation are the names of the company's initial

Correct AnswerverifiedShow Answer

The first step in the incorporation of a business firm is to

Correct AnswerverifiedB

If the procedures for incorporation are not followed precisely, others may be able to challenge the existence of the corporation.

Correct AnswerverifiedTrue

Because of their positions within the corporation, directors must make full disclosure of any conflicts of interest with respect to corporate contracts.

Correct AnswerverifiedShow Answer

Apt Adapt Inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effects of climate change. The stated purpose is to have a material positive impact on society and the environment, and to make a profit. Apt Adapt is

Correct AnswerverifiedShow Answer

A corporation's authority to act and its liability for those actions is, with respect to the firm's owners,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because of their positions within the corporation, directors cannot be held personally liable for violations of statutes enacted to protect the environment.

Correct AnswerverifiedShow Answer

To focus on individual subjects and increase efficiency, a corporate board can delegate certain tasks to committees of directors.

Correct AnswerverifiedShow Answer

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

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True

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