Question 1

Corporations have achieved dominance in which of the following ways?

Accepted Answer

A)   This form of organization accounts for 85 percent of the gross revenues of all business entities.
B)   Over 50 percent of all U.S. businesses are organized in the corporate form.
C)   Over 75 percent of American adults own stock directly or indirectly.
D)   All of these.

Question 2

A corporation is considered a citizen:

Accepted Answer

A)   of the state in which it has its principal office, for the purpose of determining diversity of citizenship.
B)   of the state of its incorporation, for the purpose of determining diversity of citizenship.
C)   in both of these situations.
D)   in neither of these situations.

Question 3

The Revised Act authorizes shareholders in closely held corporations to adopt shareholder agreements that depart from statutory norms by altering the governance of the corporation. These agreements:

Accepted Answer

A)   are effective if adopted by a majority of the shareholders.
B)   are valid for the life of the corporation unless a new agreement is reached.
C)   are binding on shareholders, the state, creditors, and other third parties.
D)   terminate automatically if the corporation's shares are traded publicly.

Question 4

The possible consequences of a defective incorporation include which of the following?

Accepted Answer

A)   The state may bring an action against the association for involuntary dissolution.
B)   A third party may assert that it is not liable to the association.
C)   The associates are held personally liable to a third party.
D)   All of these.
E)   None of these.

Question 5

The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Accepted Answer

A) True 
 B)False

Question 6

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Accepted Answer

A) True 
 B)False

Question 7

A corporation is a domestic corporation in the state in which it is incorporated.

Accepted Answer

A) True 
 B)False

Question 8

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

Accepted Answer

A) True 
 B)False

Question 9

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the basic governing document of a corporation?

Accepted Answer

A)   A subscription.
B)   A charter, after filing.
C)   The set of bylaws.
D)   A certificate of authority. B

Question 11

Which of the following is untrue regarding closely held corporations?

Accepted Answer

A)   Most corporations in the U.S. are closely held.
B)   Shareholders frequently restrict the transfer of shares to prevent "outsiders" from obtaining the stock.
C)   Shareholders usually have little voice in the management and control of the business.
D)   Some states have enacted special legislation to accommodate the needs of closely held corporations.

Question 12

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

Accepted Answer

A) True 
 B)False

Question 13

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Accepted Answer

A) True 
 B)False

Question 14

What are the principal attributes of a corporation?

Accepted Answer

(a) It is a legal entity. 
(b) It owes its existence to a state, which also regulates it. 
(c) It provides limited liability to its shareholders. 
(d) Its shares of stock are freely transferable. 
(e) Its existence may be perpetual. 
(f) Its management is centralized. 
(g) In some cases, it is considered a person; and 
(h) In some cases, it is considered a citizen.

Question 15

The City of Chicago would best be described as which of the following?

Accepted Answer

A)   A corporation formed pursuant to the Model Business Corporation Act.
B)   A close corporation.
C)   A public corporation.
D)   A domestic corporation.

Question 16

Name the classifications of corporations.

Accepted Answer

Corporations may be classified as public or private, profit or nonprofit, domestic or foreign, publicly held or closely held, subchapter S, and professional.

Question 17

The case of Harris v. Looney dealt with the issue of:

Accepted Answer

A)   a de facto corporation.
B)   defective incorporation.
C)   personal liability for a debt by a person purporting to act as or on behalf of a corporation, knowing no corporation existed.
D)   the effect of an ultra vires act.

Question 18

Carroll, Daniels, and Elmore organized their veterinary practice as a professional corporation. This organization of professionals will be treated as a partnership for liability purposes.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT a characteristic of the corporate form of doing business?

Accepted Answer

A)   Limited liability.
B)   Perpetual existence.
C)   Informal organization.
D)   Transferability of corporate shares.

Question 20

Bylaws are rules governing a corporation's internal management.

Accepted Answer

A) True 
 B)False

Exam 33: Nature and Formation of Corporations

Corporations have achieved dominance in which of the following ways?

Correct Answer
verified

A corporation is considered a citizen:

Correct Answer
verified

The Revised Act authorizes shareholders in closely held corporations to adopt shareholder agreements that depart from statutory norms by altering the governance of the corporation. These agreements:

Correct Answer
verified

The possible consequences of a defective incorporation include which of the following?

Correct Answer
verified

The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Correct Answer
verified

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Correct Answer
verified

A corporation is a domestic corporation in the state in which it is incorporated.

Correct Answer
verified

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

Correct Answer
verified

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Correct Answer
verified

Which of the following is the basic governing document of a corporation?

Correct Answer
verified
B

Which of the following is untrue regarding closely held corporations?

Correct Answer
verified

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

Correct Answer
verified

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Correct Answer
verified

What are the principal attributes of a corporation?

The City of Chicago would best be described as which of the following?

Correct Answer
verified

Name the classifications of corporations.

Correct Answer
verified
Corporations may be classified as public or private, profit or nonprofit, domestic or foreign, publicly held or closely held, subchapter S, and professional.

The case of Harris v. Looney dealt with the issue of:

Correct Answer
verified

Carroll, Daniels, and Elmore organized their veterinary practice as a professional corporation. This organization of professionals will be treated as a partnership for liability purposes.

Correct Answer
verified

Which of the following is NOT a characteristic of the corporate form of doing business?

Correct Answer
verified

Bylaws are rules governing a corporation's internal management.

Correct Answer
verified

Exam 33: Nature and Formation of Corporations

Corporations have achieved dominance in which of the following ways?

Correct AnswerverifiedShow Answer

A corporation is considered a citizen:

Correct AnswerverifiedShow Answer

The Revised Act authorizes shareholders in closely held corporations to adopt shareholder agreements that depart from statutory norms by altering the governance of the corporation. These agreements:

Correct AnswerverifiedShow Answer

The possible consequences of a defective incorporation include which of the following?

Correct AnswerverifiedShow Answer

The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Correct AnswerverifiedShow Answer

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Correct AnswerverifiedShow Answer

A corporation is a domestic corporation in the state in which it is incorporated.

Correct AnswerverifiedShow Answer

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

Correct AnswerverifiedShow Answer

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Correct AnswerverifiedShow Answer

Which of the following is the basic governing document of a corporation?

Correct AnswerverifiedB

Which of the following is untrue regarding closely held corporations?

Correct AnswerverifiedShow Answer

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

Correct AnswerverifiedShow Answer

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Correct AnswerverifiedShow Answer

What are the principal attributes of a corporation?

The City of Chicago would best be described as which of the following?

Correct AnswerverifiedShow Answer

Name the classifications of corporations.

Correct AnswerverifiedCorporations may be classified as public or private, profit or nonprofit, domestic or foreign, publicly held or closely held, subchapter S, and professional.

The case of Harris v. Looney dealt with the issue of:

Correct AnswerverifiedShow Answer

Carroll, Daniels, and Elmore organized their veterinary practice as a professional corporation. This organization of professionals will be treated as a partnership for liability purposes.

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of the corporate form of doing business?

Correct AnswerverifiedShow Answer

Bylaws are rules governing a corporation's internal management.

Correct AnswerverifiedShow Answer

Correct Answer
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B

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Corporations may be classified as public or private, profit or nonprofit, domestic or foreign, publicly held or closely held, subchapter S, and professional.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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