Question 1

Which of the following is false regarding a nonprofit corporation?

Accepted Answer

A)  A nonprofit corporation may not earn profits.
B)  Nonprofit corporations do not have shareholders.
C)  Nonprofit corporations do not issue stock.
D)  Churches and charitable organizations are examples of nonprofit corporations.
E)  Nonprofit corporations provide services to their members.F) B) and C)
G) A) and E)

Question 2

Private persons create ________ corporations for private purposes.

Accepted Answer

A)  Public
B)  Domestic
C)  Private
D)  Closely held
E)  Publicly heldF) B) and D)
G) All of the above

Question 3

[Nail Salon] Thea and her friends Josef and Danny,all U.S.citizens,want to open a nail salon.They would all like to avoid personal liability for debts of the business and/or wrongful acts of each other.They would also like to minimize taxation.Thea is in favor of a corporation and asks if there is any problem with that form of business.Josef and Danny say that they are concerned about double taxation with a corporation and that they are in favor of a partnership,even if personal liability is a concern.Thea said that she was concerned about the deductibility of losses if the corporate form was chosen.She did some research and suggested an S corporation to Josef and Danny which she claimed would avoid the problem of double taxation.
-Regarding the concerns of Josef and Danny about double taxation and Thea's suggestion regarding an S corporation,which of the following is true?

Accepted Answer

A)  Thea is correct in that double taxation may be avoided through the use of an S corporation,but this can be negated through taxation of dividends at the higher corporate rate regardless of the tax rate of the shareholder.
B)  Josef and Danny are incorrect,and an S corporation is not needed for any double taxation issue because with both a general corporation and an S corporation,tax effects would be the same with the corporation being taxed on earnings and shareholders being taxed again on dividends.
C)  Thea's suggestion will not solve the issue of double taxation because with both a regular corporation and with an S corporation,the corporation is taxed on income and shareholders are taxed again on dividends they receive.
D)  Thea is correct that double taxation may be avoided through the use of an S corporation,but this may be negated by the fact that S corporations are taxed at a rate double that of general corporations.
E)  Thea is correct that S corporation shareholders report their income from the corporation only once,as personal income.F) None of the above
G) A) and B)

Question 4

The determination of who has the power to amend the corporate bylaws after the first organizational meeting is made by the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 5

What do nonprofit corporations do with profits?

Accepted Answer

A)  Provide services to members and reinvest in the business.
B)  Distribute them to shareholders.
C)  Sell them to stockholders.
D)  Distribute them to stockholders.
E)  Nonprofit corporations are not allowed to earn profits.F) B) and E)
G) B) and D)

Question 6

[Horse Tracks] Min-ji,Marcus,and Penelope decided to form a corporation called Horse Tracks to raise horses.They all began the incorporation process by arranging for necessary capital and financing.They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation.After the corporation was formed,a problem arose with a contract for feed that Min-ji,Marcus,and Penelope had entered into while organizing the corporation.Callie,the seller of the feed,claimed that she had not been fully paid and threatened to sue the corporation.The contract Min-ji,Marcus,and Penelope had with Callie did not reference liability after the new corporation came into legal existence.Min-ji,Marcus,and Penelope asked for a novation,but were uncertain as to whether that would occur.
-Min-ji,Marcus,and Penelope would be identified by what term in their arranging for necessary capital and financing for the corporation?

Accepted Answer

A)  Promoters
B)  Subscriptioners
C)  Novators
D)  Subscribers
E)  AcceptorsF) A) and C)
G) D) and E)

Question 7

Yolanda is a shareholder in a corporation which is sued.Which of the following is true of Yolanda's potential liability?

Accepted Answer

A)  Yolanda is fully liable for the corporation's actions
B)  Yolanda's liability is limited to her investment in the corporation
C)  Yolanda may be liable for the corporation's actions if she was on the corporate board.
D)  Yolanda may be liable for the corporations' actions if the corporation is a C-corp but not an S-corp
E)  Yolanda may be liable for the corporation's actions if the corporation is an S-corp but not a C-corpF) A) and D)
G) A) and C)

Question 8

What type of corporation is created by the government to help administer law?

Accepted Answer

A)  Domestic
B)  Publicly held
C)  Public
D)  Closely held
E)  PrivateF) None of the above
G) A) and C)

Question 9

The contracts Min-ji,Marcus,and Penelope made with their friends to buy stock are known by what term?

Accepted Answer

A)  Promotion agreements
B)  Novation agreements
C)  Acceptor agreements
D)  Capital agreements
E)  Subscription agreementsF) A) and C)
G) A) and B)

Question 10

Which of the following is false regarding Société Anonymes (SA) and Société à Responsabilité Limitée (SARL) companies in France?

Accepted Answer

A)  SARL companies sell shares exclusively to company members.
B)  French law does not require that SARL companies appoint an auditor.
C)  French law requires that all SA companies appoint an independent auditor to verify the legality of their accounts.
D)  SA companies offer shares to the public and must have only one shareholder.
E)  Members of SARL companies are liable only to the extent of their contributions to the company.F) A) and C)
G) A) and B)

Question 11

If the incorporator or promoters make an error or omission during the incorporation process,courts may rule that the organization is not a corporation,in which case the organization may be ruled a[n] ________ corporation.

Accepted Answer

A)  Defective
B)  Illegal
C)  Uncertified
D)  Expelled
E)  DefunctF) B) and E)
G) All of the above

Question 12

In states in which it conducts business but is not incorporated,a corporation is a[n] ________ corporation.

Accepted Answer

A)  Interstate
B)  Approved
C)  Foreign
D)  Visiting
E)  IntrastateF) A) and C)
G) B) and C)

Question 13

Corporations have implied powers.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following adopts corporate bylaws?

Accepted Answer

A)  Officers
B)  Incorporators
C)  Shareholders
D)  Promoters
E)  DirectorsF) C) and D)
G) B) and C)

Question 15

Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ________.

Accepted Answer

A)  Res ipsa
B)  Quo warranto
C)  Quo facto
D)  Sine qua non
E)  Quo jureF) D) and E)
G) None of the above

Question 16

Which of the following is not required in a corporation's articles of incorporation under the Revised Model Business Corporation Act?

Accepted Answer

A)  The names and addresses of the incorporators
B)  The address of the registered office
C)  The name of the registered agent
D)  The name of the corporation
E)  Information regarding the purpose of the corporationF) C) and D)
G) All of the above

Question 17

Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Accepted Answer

A)  Stare decisis
B)  Actus reus
C)  Ab initio
D)  Respondeat superior
E)  Res ipsa loquiturF) All of the above
G) B) and D)

Question 18

A corporation must be incorporated in the state in which it has its principal place of business.

Accepted Answer

A) True 
 B)False

Question 19

What are the six express corporate powers,as set forth in the text?

Accepted Answer

Following ...

Question 20

In the corporate formation process,which of the following provides basic information about the corporation?

Accepted Answer

A)  The agreement to promote
B)  The agreement to incorporate
C)  The articles of incorporation
D)  The articles of subscription
E)  The agreement to subscribeF) A) and B)
G) A) and C)

Exam 38: Corporations: Formation and Financing

Private persons create ________ corporations for private purposes.

Correct Answer
verified

What type of corporation is created by the government to help administer law?

Correct Answer
verified

In states in which it conducts business but is not incorporated,a corporation is a[n] ________ corporation.

Correct Answer
verified

Yolanda is a shareholder in a corporation which is sued.Which of the following is true of Yolanda's potential liability?

Correct Answer
verified

In the corporate formation process,which of the following provides basic information about the corporation?

Correct Answer
verified

Corporations have implied powers.

Correct Answer
verified

Which of the following is false regarding a nonprofit corporation?

Correct Answer
verified

A corporation must be incorporated in the state in which it has its principal place of business.

Correct Answer
verified

The determination of who has the power to amend the corporate bylaws after the first organizational meeting is made by the articles of incorporation.

Correct Answer
verified

Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Correct Answer
verified

What do nonprofit corporations do with profits?

Correct Answer
verified

The contracts Min-ji,Marcus,and Penelope made with their friends to buy stock are known by what term?

Correct Answer
verified

If the incorporator or promoters make an error or omission during the incorporation process,courts may rule that the organization is not a corporation,in which case the organization may be ruled a[n] ________ corporation.

Correct Answer
verified

What are the six express corporate powers,as set forth in the text?

Correct Answer
verified
Following ...
View Answer

Correct Answer
verified

Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ________.

Correct Answer
verified

Which of the following is not required in a corporation's articles of incorporation under the Revised Model Business Corporation Act?

Correct Answer
verified

Which of the following is false regarding Société Anonymes (SA) and Société à Responsabilité Limitée (SARL) companies in France?

Correct Answer
verified

Which of the following adopts corporate bylaws?

Correct Answer
verified

Correct Answer
verified

Exam 38: Corporations: Formation and Financing

Private persons create ________ corporations for private purposes.

Correct AnswerverifiedShow Answer

What type of corporation is created by the government to help administer law?

Correct AnswerverifiedShow Answer

In states in which it conducts business but is not incorporated,a corporation is a[n] ________ corporation.

Correct AnswerverifiedShow Answer

Yolanda is a shareholder in a corporation which is sued.Which of the following is true of Yolanda's potential liability?

Correct AnswerverifiedShow Answer

In the corporate formation process,which of the following provides basic information about the corporation?

Correct AnswerverifiedShow Answer

Corporations have implied powers.

Correct AnswerverifiedShow Answer

Which of the following is false regarding a nonprofit corporation?

Correct AnswerverifiedShow Answer

A corporation must be incorporated in the state in which it has its principal place of business.

Correct AnswerverifiedShow Answer

The determination of who has the power to amend the corporate bylaws after the first organizational meeting is made by the articles of incorporation.

Correct AnswerverifiedShow Answer

Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Correct AnswerverifiedShow Answer

What do nonprofit corporations do with profits?

Correct AnswerverifiedShow Answer

The contracts Min-ji,Marcus,and Penelope made with their friends to buy stock are known by what term?

Correct AnswerverifiedShow Answer

If the incorporator or promoters make an error or omission during the incorporation process,courts may rule that the organization is not a corporation,in which case the organization may be ruled a[n] ________ corporation.

Correct AnswerverifiedShow Answer

What are the six express corporate powers,as set forth in the text?

Correct AnswerverifiedFollowing ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ________.

Correct AnswerverifiedShow Answer

Which of the following is not required in a corporation's articles of incorporation under the Revised Model Business Corporation Act?

Correct AnswerverifiedShow Answer

Which of the following is false regarding Société Anonymes (SA) and Société à Responsabilité Limitée (SARL) companies in France?

Correct AnswerverifiedShow Answer

Which of the following adopts corporate bylaws?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Following ...
View Answer

Correct Answer
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