Question 1

The initial board of directors of a corporation is normally appointed by the incorporators when the corporation is created.

Accepted Answer

A) True 
 B)False

Question 2

Quorum requirements vary among jurisdictions.

Accepted Answer

A) True 
 B)False

Question 3

A corporation is

Accepted Answer

A)  a natural being.
B)  a tangible thing.
C)  an artificial legal person.
D)  a non-entity.E) None of the above
F) B) and C)

Question 4

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 5

The primary document needed to incorporate a business is the bylaws-the primary source of guidelines for the firm's management and operation.

Accepted Answer

A) True 
 B)False

Question 6

Stocks, or equity securities, represent the purchase of ownership in the business firm.

Accepted Answer

A) True 
 B)False

Question 7

A corporation is recognized under U.S. law as a person.

Accepted Answer

A) True 
 B)False

Question 8

Drones Inc. has three directors, a president, two vice presidents, a secretary, and a treasurer. Ethel is a Drone director. In most states, Ethel can also hold a Drone corporate office

Accepted Answer

A)  under no circumstances.
B)  under any circumstances.
C)  if she resigns as director.
D)  if the shareholders consent.E) A) and B)
F) A) and C)

Question 9

Directors have a right to be notified of all board meetings.

Accepted Answer

A) True 
 B)False

Question 10

Eton owns Fast Freight Company. He uses the firm's funds to pay his personal expenses, creates Go Trucking Inc. to engage in the same business, transfers Fast Freight's assets to Go Trucking, and petitions Fast Freight into bankruptcy. This most likely warrants

Accepted Answer

A)  a bonus to Eton for effectively eliminating the firm's debts.
B)  a discharge for Fast Freight in bankruptcy.
C)  a pierce of the corporate veil.
D)  the application of the doctrine of corporation by estoppel to Go Trucking.E) B) and D)
F) A) and D)

Question 11

The primary document needed to incorporate a business is the articles of incorporation-the primary source of authority for the firm's organization and functions.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A business firm whose shares are held by a single person may be a sole proprietorship, but it cannot a corporation.

Accepted Answer

A) True 
 B)False

Question 14

Molly is a director and Ned is an officer of Online Education Inc. Liability for the torts of employees under their supervision may extend to

Accepted Answer

A)  Molly only.
B)  Ned only.
C)  Molly and Ned.
D)  none of the choices.E) A) and C)
F) A) and B)

Question 15

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

Accepted Answer

A) True 
 B)False

Question 16

With the exception of malpractice, liability for torts committed by others in a firm cannot be imposed on the shareholders of

Accepted Answer

A)  a professional corporation.
B)  a benefit corporation.
C)  a close corporation.
D)  any corporation.E) A) and B)
F) A) and C)

Question 17

Individual state laws should be relied on to determine corporate law because, despite the existence and use of model corporation acts, there is considerable variation among the states.

Accepted Answer

A) True 
 B)False

Question 18

A shareholder in a professional corporation generally cannot be held liable for malpractice by other professionals at the firm.

Accepted Answer

A) True 
 B)False

Question 19

A director's right to access the corporation's books can be restricted by the corporate articles.

Accepted Answer

A) True 
 B)False

Question 20

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) B) and C)

Exam 37: Corporate Formation and Financing

A shareholder in a professional corporation generally cannot be held liable for malpractice by other professionals at the firm.

Correct AnswerverifiedShow Answer

Stocks, or equity securities, represent the purchase of ownership in the business firm.

Correct AnswerverifiedShow Answer

The primary document needed to incorporate a business is the bylaws-the primary source of guidelines for the firm's management and operation.

Correct AnswerverifiedShow Answer

Eton owns Fast Freight Company. He uses the firm's funds to pay his personal expenses, creates Go Trucking Inc. to engage in the same business, transfers Fast Freight's assets to Go Trucking, and petitions Fast Freight into bankruptcy. This most likely warrants

Correct AnswerverifiedShow Answer

A corporation is

Correct AnswerverifiedShow Answer

With the exception of malpractice, liability for torts committed by others in a firm cannot be imposed on the shareholders of

Correct AnswerverifiedShow Answer

Quorum requirements vary among jurisdictions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The initial board of directors of a corporation is normally appointed by the incorporators when the corporation is created.

Correct AnswerverifiedShow Answer

The primary document needed to incorporate a business is the articles of incorporation-the primary source of authority for the firm's organization and functions.

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

Directors have a right to be notified of all board meetings.

Correct AnswerverifiedShow Answer

A business firm whose shares are held by a single person may be a sole proprietorship, but it cannot a corporation.

Correct AnswerverifiedShow Answer

A director's right to access the corporation's books can be restricted by the corporate articles.

Correct AnswerverifiedShow Answer

A corporation is recognized under U.S. law as a person.

Correct AnswerverifiedShow Answer

Individual state laws should be relied on to determine corporate law because, despite the existence and use of model corporation acts, there is considerable variation among the states.

Correct AnswerverifiedShow Answer

Drones Inc. has three directors, a president, two vice presidents, a secretary, and a treasurer. Ethel is a Drone director. In most states, Ethel can also hold a Drone corporate office

Correct AnswerverifiedShow Answer

Molly is a director and Ned is an officer of Online Education Inc. Liability for the torts of employees under their supervision may extend to

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

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

Correct AnswerverifiedShow Answer

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