Question 1

When a manager compete against the corporation without its consent,he is in violation of:

Accepted Answer

A)  the business judgment rule.
B)  the self dealing doctrine.
C)  his duty of care.
D)  the corporate opportunity doctrine.

Question 2

Fashions,Inc.has 52 shareholders.There is no shareholder agreement concerning the board of directors.The company is subject to the Model Act.How many directors is Fashions,Inc.required to have?

Accepted Answer

A)  None.
B)  One.
C)  Two.
D)  Five.

Question 3

Foster,Asher,and Jefferies are the incorporators of Moreland,Inc.They will elect the first set of directors.

Accepted Answer

A) True 
 B)False

Question 4

A derivative lawsuit is filed by the shareholders on behalf of the corporation to remedy a wrong to the corporation.

Accepted Answer

A) True 
 B)False

Question 5

The "business judgment rule" has been abandoned in most states.

Accepted Answer

A) True 
 B)False

Question 6

Treasury stock is:

Accepted Answer

A)  stock that has been authorized but not yet sold.
B)  stock that has been sold.
C)  stock that has not been authorized yet.
D)  stock that the company has sold but later bought back.

Question 7

A corporation is incorporated:

Accepted Answer

A)  under state law.
B)  under federal law.
C)  under both state law and federal law.
D)  under either state or federal law depending on whether its stock is publicly traded or not.

Question 8

Casey decided to incorporate her business under the name yStar Inc.Before yStar was incorporated,Casey signed a contract in the name of yStar,Inc.to have some office space remodeled.Which statement is correct?

Accepted Answer

A)  yStar is liable on the contract because the contract was signed in its name.
B)  yStar becomes liable on the contract as soon as it is incorporated.
C)  yStar is liable on the contract if the contractor knows that the corporation does not yet exist.
D)  yStar will be liable on the contract only if the corporation adopts the contract.

Question 9

Discuss how the Sarbanes-Oxley Act affects Haletronne Co.,a publicly traded corporation.

Accepted Answer

Under the Sarbanes-Oxley Act: the compan...

Question 10

Terminating a corporation is a three-step process: dissolution,winding up,and termination.

Accepted Answer

A) True 
 B)False

Question 11

A business corporation can only be incorporated under state law.

Accepted Answer

A) True 
 B)False

Question 12

Better Built Storage Buildings,Inc.wants to incorporate in Delaware but has no office there.It must:

Accepted Answer

A)  open an office so it has an official address in Delaware where the Secretary of State can contact the business.
B)  hire a registered agent to serve as its official presence in Delaware.
C)  incorporate only where it actually does business so anyone who wants to sue the corporation can serve the complaint in-state.
D)  give the Secretary of State of Delaware the address and phone number of its corporate office and a list of its top executives so the Secretary of State of Delaware can make sufficient contact out of state.

Question 13

Shareholders have the authority to manage the corporate business.

Accepted Answer

A) True 
 B)False

Question 14

The promoter is personally liable on any contracts he signs before the corporation is formed.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the self dealing concept.Under what circumstances is a self-dealing transaction valid?

Accepted Answer

Self-dealing means that a manager makes ...

Question 16

Laurie is incorporating her business.The business's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:

Accepted Answer

A)  must incorporate the business in Wisconsin, the home state.
B)  must incorporate the business in Wisconsin, California, Michigan, Pennsylvania, and Virginia.
C)  must incorporate in Delaware.
D)  can incorporate the business in any state.

Question 17

Shareholders have the right to manage the day-to-day business of the company.

Accepted Answer

A) True 
 B)False

Question 18

Maureen,a shareholder of Metra,Inc.,was unhappy with how the corporation was being managed.Maureen wanted to be a member of Metra's board of directors.Which statement is correct?

Accepted Answer

A)  If Maureen owns at least 1 percent or $2,000 of Metra's stock, she can require the company to include her name as a candidate for the board of directors in its proxy statement.
B)  If Maureen has a proper purpose, she can require the company to include her name as a candidate for the board of directors in its proxy statement.
C)  If Maureen can show cause, she can require the company to include her name as a candidate for the board of directors in its proxy statement.
D)  Maureen cannot require that the company put her name in the proxy statement; she must prepare and distribute her own proxy.

Question 19

What is meant by the term "piercing the corporate veil"?

Accepted Answer

A)  Corporate directors and/or officers may be held personally liable to a person damaged by an act of the corporation.
B)  Corporate shareholders may be held personally liable to a person damaged by an act of the corporation.
C)  Both of the above.
D)  None of the above.

Question 20

Shareholder proposals on the company proxy statement:

Accepted Answer

A)  must be stated in the form of a request or recommendation according to SEC rules.
B)  may only be implemented by the company if they receive support from at least a simple majority of the shareholders.
C)  are, in about half of the cases, withdrawn before a vote because the company decides to implement the proposal.
D)  may address only corporate-governance issues, such as cumulative voting or executive compensation, but may not address the shareholder's political agenda, such as saving the environment.

Exam 30: Corporations

Casey decided to incorporate her business under the name yStar Inc.Before yStar was incorporated,Casey signed a contract in the name of yStar,Inc.to have some office space remodeled.Which statement is correct?

Correct AnswerverifiedShow Answer

When a manager compete against the corporation without its consent,he is in violation of:

Correct AnswerverifiedShow Answer

Laurie is incorporating her business.The business's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:

Correct AnswerverifiedShow Answer

Shareholders have the right to manage the day-to-day business of the company.

Correct AnswerverifiedShow Answer

Discuss how the Sarbanes-Oxley Act affects Haletronne Co.,a publicly traded corporation.

Correct AnswerverifiedUnder the Sarbanes-Oxley Act: the compan...View AnswerShow Answer

A business corporation can only be incorporated under state law.

Correct AnswerverifiedShow Answer

Foster,Asher,and Jefferies are the incorporators of Moreland,Inc.They will elect the first set of directors.

Correct AnswerverifiedShow Answer

What is meant by the term "piercing the corporate veil"?

Correct AnswerverifiedShow Answer

Terminating a corporation is a three-step process: dissolution,winding up,and termination.

Correct AnswerverifiedShow Answer

Better Built Storage Buildings,Inc.wants to incorporate in Delaware but has no office there.It must:

Correct AnswerverifiedShow Answer

Shareholder proposals on the company proxy statement:

Correct AnswerverifiedShow Answer

A derivative lawsuit is filed by the shareholders on behalf of the corporation to remedy a wrong to the corporation.

Correct AnswerverifiedShow Answer

The "business judgment rule" has been abandoned in most states.

Correct AnswerverifiedShow Answer

Discuss the self dealing concept.Under what circumstances is a self-dealing transaction valid?

Correct AnswerverifiedSelf-dealing means that a manager makes ...View AnswerShow Answer

A corporation is incorporated:

Correct AnswerverifiedShow Answer

Shareholders have the authority to manage the corporate business.

Correct AnswerverifiedShow Answer

The promoter is personally liable on any contracts he signs before the corporation is formed.

Correct AnswerverifiedShow Answer

Fashions,Inc.has 52 shareholders.There is no shareholder agreement concerning the board of directors.The company is subject to the Model Act.How many directors is Fashions,Inc.required to have?

Correct AnswerverifiedShow Answer

Maureen,a shareholder of Metra,Inc.,was unhappy with how the corporation was being managed.Maureen wanted to be a member of Metra's board of directors.Which statement is correct?

Correct AnswerverifiedShow Answer

Treasury stock is:

Correct AnswerverifiedShow Answer

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Under the Sarbanes-Oxley Act: the compan...
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Self-dealing means that a manager makes ...
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