Question 1

Dividend payments made to owners under equity financing are tax deductible, whereas interest payments on debt securities are not.

Accepted Answer

A) True 
 B)False

Question 2

A corporation whose stock is traded on at least one national securities exchange is known as a(n)  ________ corporation.

Accepted Answer

A)  private
B)  publicly held
C)  closely held
D)  eleemosynaryE) None of the above
F) B) and D)

Question 3

Which of the following statements is true about a corporation's boards of directors?

Accepted Answer

A)  They typically abdicate their policy-making function and, being agents of the corporation, serve as proxies for shareholders.
B)  They are actively involved in daily corporate affairs.
C)  They actively manage the policies of the corporation but leave day-to-day affairs to the shareholders.
D)  They are considered as agents of a corporation.E) A) and D)
F) None of the above

Question 4

Which of the following is true of a proxy election for the board of directors of a corporation?

Accepted Answer

A)  Shareholders must vote for a candidate but do not have the option to allow the proxy committee to vote the shares in any way it sees fit.
B)  A biographical sketch of each of the candidates for the board of directors is sent to all shareholders.
C)  Under the National Stock Exchange rules, the proxy committee must use a ballot form to solicit proxies.
D)  The proxy committee sends only preferred shareholders a statement of resolutions on which the shareholders are to vote.E) A) and D)
F) B) and D)

Question 5

To qualify for Subchapter S treatment under the Internal Revenue Code (IRC), a domestic corporation must have more than 35 shareholders.

Accepted Answer

A) True 
 B)False

Question 6

The capital that a corporation raises through the sale of shares that entitle the shareholders to certain rights of ownership is known as ________.

Accepted Answer

A)  stock
B)  currency
C)  dividend
D)  interestE) A) and C)
F) None of the above

Question 7

What is preferred stock? What are its various categories?

Accepted Answer

Preferred stock is a class of stock that...

Question 8

Nicolas is the director of Brakers Industries, a drill manufacturer. He is also a major shareholder of Alivert Corp., a leading landscaping tools manufacturer. Brakers undergoes a financial crunch and finds it difficult to raise money. Nicolas signs up Brakers as a supplier of drills to Alivert Corp. Having obtained a new client, Brakers manages to avoid financial distress. However, Nicolas has not informed anyone of what he has done. Can this transaction be voided? If yes, on what grounds can it be voided?

Accepted Answer

When a corporation cannot take advantage...

Question 9

Unless a limited liability company has specified otherwise in its articles of organization, its duration is unlimited or at will, meaning that it has no specific term.

Accepted Answer

A) True 
 B)False

Question 10

List the functions that the board of directors of a corporation must perform as specified by the Revised Model Business Corporations Act (RMBCA).

Accepted Answer

Recognizing that most directors are not ...

Question 11

The owners of a limited liability company are called ________.

Accepted Answer

A)  members
B)  shareholders
C)  officers
D)  directorsE) A) and B)
F) None of the above

Question 12

The funds for a rollover business start-up corporation come from an individual's 401K plan.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true of a Subchapter S corporation?

Accepted Answer

A)  It is taxed like a publicly held corporation.
B)  It is organized and operated as a general partnership.
C)  It is taxed like a partnership.
D)  It is organized and operated as a limited liability partnership.E) B) and C)
F) All of the above

Question 14

Which of the following best defines a corporation?

Accepted Answer

A)  It is an entity created and authorized by federal law that raises capital by issuing stock to limited partners.
B)  It is an entity created and authorized by state law that raises capital by issuing stock to investors, who own the corporation.
C)  It is an entity created and authorized by federal law that raises capital by issuing stock to investors, who own the corporation.
D)  It is an entity created and authorized by state law that raises capital by issuing stock to limited partners.E) A) and B)
F) A) and C)

Question 15

Like shareholders, directors of a corporation are allowed to vote by proxy.

Accepted Answer

A) True 
 B)False

Question 16

Which class of stock entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation?

Accepted Answer

A)  preferred stock
B)  privileged stock
C)  common stock
D)  convertible stockE) None of the above
F) A) and B)

Question 17

The good-faith rule presumes that ________.

Accepted Answer

A)  corporate officers, directors, and agents will not take personal advantage of an opportunity that, in all fairness, should have belonged to the corporation
B)  buyback programs prevent stock options and the new shares resulting from the exercise of options from diluting stock prices and earnings per share
C)  officers and directors will exercise their duties in a manner they reasonably believe to be in the best interests of the corporation
D)  the valuation of the property or services given as consideration for the stock is fair as long as it is honestly madeE) A) and B)
F) B) and C)

Question 18

Which of the following statements is true of a multinational corporation?

Accepted Answer

A)  It is declining in importance around the world because it is increasingly being replaced by private corporations.
B)  Its stock is generally traded on the securities exchanges of several nations.
C)  It restricts its production to a single nation but maintains worldwide distribution sites.
D)  Its managers should be citizens of the same country in which its corporate headquarters is located.E) A) and C)
F) All of the above

Question 19

If a corporation issues shares for less than the stated value, it remains liable to the shareholder for the difference between the stated value and the amount of consideration actually paid.

Accepted Answer

A) True 
 B)False

Question 20

Formal responsibility for management of a corporation is vested in its board of directors, who are elected by the shareholders.

Accepted Answer

A) True 
 B)False

Exam 17: Law and Business Associations

The capital that a corporation raises through the sale of shares that entitle the shareholders to certain rights of ownership is known as ________.

Correct Answer
verified

Unless a limited liability company has specified otherwise in its articles of organization, its duration is unlimited or at will, meaning that it has no specific term.

Correct Answer
verified

To qualify for Subchapter S treatment under the Internal Revenue Code (IRC), a domestic corporation must have more than 35 shareholders.

Correct Answer
verified

List the functions that the board of directors of a corporation must perform as specified by the Revised Model Business Corporations Act (RMBCA).

Correct Answer
verified
Recognizing that most directors are not ...
View Answer

Which of the following best defines a corporation?

Correct Answer
verified

Dividend payments made to owners under equity financing are tax deductible, whereas interest payments on debt securities are not.

Correct Answer
verified

Which of the following statements is true of a Subchapter S corporation?

Correct Answer
verified

The funds for a rollover business start-up corporation come from an individual's 401K plan.

Correct Answer
verified

Which of the following statements is true about a corporation's boards of directors?

Correct Answer
verified

The good-faith rule presumes that ________.

Correct Answer
verified

Which of the following is true of a proxy election for the board of directors of a corporation?

Correct Answer
verified

Which class of stock entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation?

Correct Answer
verified

What is preferred stock? What are its various categories?

Correct Answer
verified
Preferred stock is a class of stock that...
View Answer

If a corporation issues shares for less than the stated value, it remains liable to the shareholder for the difference between the stated value and the amount of consideration actually paid.

Correct Answer
verified

The owners of a limited liability company are called ________.

Correct Answer
verified

Which of the following statements is true of a multinational corporation?

Correct Answer
verified

Like shareholders, directors of a corporation are allowed to vote by proxy.

Correct Answer
verified

A corporation whose stock is traded on at least one national securities exchange is known as a(n) ________ corporation.

Correct Answer
verified

Formal responsibility for management of a corporation is vested in its board of directors, who are elected by the shareholders.

Correct Answer
verified

Correct Answer
verified
When a corporation cannot take advantage...
View Answer

Exam 17: Law and Business Associations

The capital that a corporation raises through the sale of shares that entitle the shareholders to certain rights of ownership is known as ________.

Correct AnswerverifiedShow Answer

Unless a limited liability company has specified otherwise in its articles of organization, its duration is unlimited or at will, meaning that it has no specific term.

Correct AnswerverifiedShow Answer

To qualify for Subchapter S treatment under the Internal Revenue Code (IRC), a domestic corporation must have more than 35 shareholders.

Correct AnswerverifiedShow Answer

List the functions that the board of directors of a corporation must perform as specified by the Revised Model Business Corporations Act (RMBCA).

Correct AnswerverifiedRecognizing that most directors are not ...View AnswerShow Answer

Which of the following best defines a corporation?

Correct AnswerverifiedShow Answer

Dividend payments made to owners under equity financing are tax deductible, whereas interest payments on debt securities are not.

Correct AnswerverifiedShow Answer

Which of the following statements is true of a Subchapter S corporation?

Correct AnswerverifiedShow Answer

The funds for a rollover business start-up corporation come from an individual's 401K plan.

Correct AnswerverifiedShow Answer

Which of the following statements is true about a corporation's boards of directors?

Correct AnswerverifiedShow Answer

The good-faith rule presumes that ________.

Correct AnswerverifiedShow Answer

Which of the following is true of a proxy election for the board of directors of a corporation?

Correct AnswerverifiedShow Answer

Which class of stock entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation?

Correct AnswerverifiedShow Answer

What is preferred stock? What are its various categories?

Correct AnswerverifiedPreferred stock is a class of stock that...View AnswerShow Answer

If a corporation issues shares for less than the stated value, it remains liable to the shareholder for the difference between the stated value and the amount of consideration actually paid.

Correct AnswerverifiedShow Answer

The owners of a limited liability company are called ________.

Correct AnswerverifiedShow Answer

Which of the following statements is true of a multinational corporation?

Correct AnswerverifiedShow Answer

Like shareholders, directors of a corporation are allowed to vote by proxy.

Correct AnswerverifiedShow Answer

A corporation whose stock is traded on at least one national securities exchange is known as a(n) ________ corporation.

Correct AnswerverifiedShow Answer

Formal responsibility for management of a corporation is vested in its board of directors, who are elected by the shareholders.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWhen a corporation cannot take advantage...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Recognizing that most directors are not ...
View 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
Preferred stock is a class of stock that...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When a corporation cannot take advantage...
View Answer