Question 1

A closely held corporation may be privately held or publicly held depending on the status determined at creation.

Accepted Answer

A) True 
 B)False

Question 2

Saul was elected to the board of trustees of Round Way Corp.four years ago.He makes sure everyone knows he's a board member and always brings it up at parties.Unfortunately he cares more about the prestige than doing a good job so he hasn't attended board meetings nor is he attending committee meetings to which he's been assigned.If the insiders at Round Way enter into a series of bad business deals causing financial loss to the corporation:

Accepted Answer

A)   Saul is shielded from liability under the corporate veil.
B)   Saul cannot be held responsible because he didn't vote to approve the transactions.
C)   Saul will be liable because his inattention will likely be considered negligence on his part.
D)   Saul will be held liable because by accepting the board position he has opened himself up to liability for the actions of the corporation

Question 3

Once a corporation is recognized as existing by the state,the corporation automatically becomes liable for all contracts which a promoter had entered into on behalf of the corporation.

Accepted Answer

A) True 
 B)False

Question 4

All publicly held corporations are also classified as public corporations.

Accepted Answer

A) True 
 B)False

Question 5

Corporate officers are:

Accepted Answer

A)   elected by the shareholders.
B)   appointed or elected by the board.
C)   appointed by the board and ratified by the shareholders.
D)   elected by the shareholders and ratified by the board

Question 6

Privately held corporations are more common than are publicly held corporations.

Accepted Answer

A) True 
 B)False

Question 7

A startup business planning to incorporate must file for incorporation in the state they originally plan to do business in.

Accepted Answer

A) True 
 B)False

Question 8

Privately held corporations may issue a ________ in lieu of conducting a formal annual meeting.

Accepted Answer

A)   testament of meeting occurrence
B)   unanimous consent resolution
C)   statement of meeting substitution
D)   proof of alternative meeting

Question 9

Creation and internal governance of corporations is governed by:

Accepted Answer

A)   state laws.
B)   federal laws.
C)   the Revised Model Business Corporation Act.
D)   common law

Question 10

One benefit of the Subchapter S corporation is that there is no double taxation.

Accepted Answer

A) True 
 B)False

Question 11

Each of the following is a factor used by courts to determine whether to pierce the corporate veil except:

Accepted Answer

A)   poor management and decision making performed by inadequately trained or educated manager.
B)   inadequate capitalization.
C)   evidence of fraud or willful misconduct.
D)   failure to follow necessary corporate formalities

Question 12

Which of the following is not true regarding venture capital firms?

Accepted Answer

A)   they are generally long term investors
B)   they generally concentrate on one particular industry
C)   they usually insist on substantial control of the corporation being funded through membership on its board or through appointments to certain officer positions
D)   they are generally a source of expertise in operations and expansion of the corporation being funded

Question 13

The articles of incorporation for Pedal Power,Inc.have been approved and registered by the state.What needs to be done at the initial organizational meeting?

Accepted Answer

Once the articles of incorporation are a...

Question 14

In Goldman v.Chapman and Region Associates,the court was asked to pierce Region's corporate veil and find Chapman personally liable because Chapman was the sole owner and operator of Region Associates who Goldman had successfully sued.The court found that:

Accepted Answer

A)   being the sole owner and decision maker is not sufficient cause to pierce the corporate veil without evidence of misconduct.
B)   the fact that Chapman's corporation was found liable for $209,320 is evidence of misconduct sufficient to pierce the corporate veil.
C)   any time there is one owner and decision maker, the corporation is considered to be that persons "alter ego" and the corporate veil may be pierced without the need to provide additional evidence.
D)   the liability protections afforded to owners of corporations were not intended to protect one party businesses due to the enhanced possibility of frauds due to lack of oversight by others so one person corporations do not protect that individual from liability

Question 15

Unless limited by the articles of incorporation,shareholders may vote to remove a director with or without cause,however; the courts may only remove a board member for cause.

Accepted Answer

A) True 
 B)False

Question 16

Corporate bondholders are creditors of the corporation but not shareholders.

Accepted Answer

A) True 
 B)False

Question 17

In H.Carl McCall,Trustee of the New York Common Retirement Fund,et al.,Derivatively on Behalf of Columbia/HCA Healthcare Corporation v.Scott,suit was brought claiming a breach of their fiduciary duties by the board with regard to alleged fraudulent billing practices.The board defended by citing the corporate charter which limits the liability of directors for breach of duty claims as long as they did not act in bad faith.The court determined that:

Accepted Answer

A)   an inclusion in the charter limiting liability for fiduciary duties owed is void as it is against public policy.
B)   the board lacked the necessary experience to understand the nature of the practices but did not act in bad faith so the charter inclusion would act to shield the board from liability.
C)   the board ignored direct and indirect signs pointing to the fact that fraudulent practices were occurring and their failure to investigate breached their duty of care.
D)   the shareholders suit was improper as a derivative action and needed to be filed as a direct action

Question 18

The document filed with the state that begins the incorporation process in the majority of states is called the:

Accepted Answer

A)   articles of incorporation.
B)   declaration of incorporation.
C)   statement of incorporation.
D)   certificate of incorporation

Question 19

(p.Reflective Thinking) The corporation with the most shareholders is the:

Accepted Answer

A)   public corporation.
B)   professional corporation.
C)   publicly held corporation.
D)   nonprofit corporation

Question 20

Power Play,Inc.has decided to raise capital to grow and strengthen the company to make it attractive to competitors who might wish to purchase the business.A board member has suggested that they seek funding through a venture capital firm.How does a venture capital firm operate and is there a disadvantage to using venture capital?

Accepted Answer

Venture capital is funding provided by a...

Exam 15: Corporations

The document filed with the state that begins the incorporation process in the majority of states is called the:

Correct Answer
verified

Unless limited by the articles of incorporation,shareholders may vote to remove a director with or without cause,however; the courts may only remove a board member for cause.

Correct Answer
verified

Corporate officers are:

Correct Answer
verified

Which of the following is not true regarding venture capital firms?

Correct Answer
verified

One benefit of the Subchapter S corporation is that there is no double taxation.

Correct Answer
verified

A closely held corporation may be privately held or publicly held depending on the status determined at creation.

Correct Answer
verified

Correct Answer
verified

The articles of incorporation for Pedal Power,Inc.have been approved and registered by the state.What needs to be done at the initial organizational meeting?

Correct Answer
verified
Once the articles of incorporation are a...
View Answer

Each of the following is a factor used by courts to determine whether to pierce the corporate veil except:

Correct Answer
verified

Correct Answer
verified
Venture capital is funding provided by a...
View Answer

(p.Reflective Thinking) The corporation with the most shareholders is the:

Correct Answer
verified

In Goldman v.Chapman and Region Associates,the court was asked to pierce Region's corporate veil and find Chapman personally liable because Chapman was the sole owner and operator of Region Associates who Goldman had successfully sued.The court found that:

Correct Answer
verified

All publicly held corporations are also classified as public corporations.

Correct Answer
verified

Correct Answer
verified

Privately held corporations are more common than are publicly held corporations.

Correct Answer
verified

Once a corporation is recognized as existing by the state,the corporation automatically becomes liable for all contracts which a promoter had entered into on behalf of the corporation.

Correct Answer
verified

A startup business planning to incorporate must file for incorporation in the state they originally plan to do business in.

Correct Answer
verified

Privately held corporations may issue a ________ in lieu of conducting a formal annual meeting.

Correct Answer
verified

Creation and internal governance of corporations is governed by:

Correct Answer
verified

Corporate bondholders are creditors of the corporation but not shareholders.

Correct Answer
verified

Exam 15: Corporations

The document filed with the state that begins the incorporation process in the majority of states is called the:

Correct AnswerverifiedShow Answer

Unless limited by the articles of incorporation,shareholders may vote to remove a director with or without cause,however; the courts may only remove a board member for cause.

Correct AnswerverifiedShow Answer

Corporate officers are:

Correct AnswerverifiedShow Answer

Which of the following is not true regarding venture capital firms?

Correct AnswerverifiedShow Answer

One benefit of the Subchapter S corporation is that there is no double taxation.

Correct AnswerverifiedShow Answer

A closely held corporation may be privately held or publicly held depending on the status determined at creation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The articles of incorporation for Pedal Power,Inc.have been approved and registered by the state.What needs to be done at the initial organizational meeting?

Correct AnswerverifiedOnce the articles of incorporation are a...View AnswerShow Answer

Each of the following is a factor used by courts to determine whether to pierce the corporate veil except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedVenture capital is funding provided by a...View AnswerShow Answer

(p.Reflective Thinking) The corporation with the most shareholders is the:

Correct AnswerverifiedShow Answer

In Goldman v.Chapman and Region Associates,the court was asked to pierce Region's corporate veil and find Chapman personally liable because Chapman was the sole owner and operator of Region Associates who Goldman had successfully sued.The court found that:

Correct AnswerverifiedShow Answer

All publicly held corporations are also classified as public corporations.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Privately held corporations are more common than are publicly held corporations.

Correct AnswerverifiedShow Answer

Once a corporation is recognized as existing by the state,the corporation automatically becomes liable for all contracts which a promoter had entered into on behalf of the corporation.

Correct AnswerverifiedShow Answer

A startup business planning to incorporate must file for incorporation in the state they originally plan to do business in.

Correct AnswerverifiedShow Answer

Privately held corporations may issue a ________ in lieu of conducting a formal annual meeting.

Correct AnswerverifiedShow Answer

Creation and internal governance of corporations is governed by:

Correct AnswerverifiedShow Answer

Corporate bondholders are creditors of the corporation but not shareholders.

Correct AnswerverifiedShow 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
Once the articles of incorporation are a...
View Answer

Correct Answer
verified

Correct Answer
verified
Venture capital is funding provided by a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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