Question 1

DeFazio's Italian Restaurants, Inc., holds a shareholders' meeting. Corporate business matters are presented at the meeting in the form of

Accepted Answer

A)   resolutions.
B)   proxies.
C)   articles of incorporation.
D)   bylaws.E) B) and C)
F) A) and D) A

Question 2

Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is

Accepted Answer

A)   a domestic corporation.
B)   a foreign corporation.
C)   an alien corporation.
D)   a non-entity.E) A) and D)
F) A) and C)

Question 3

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This transaction was

Accepted Answer

A)   a consolidation.
B)   a tender offer.
C)   a short-form merger.
D)   a termination.E) A) and B)
F) A) and C)

Question 4

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with

Accepted Answer

A)   the board of directors.
B)   the officers.
C)   the owners.
D)   the shareholders.E) B) and D)
F) None of the above

Question 5

State laws regarding corporations are uniform.

Accepted Answer

A) True 
 B)False

Question 6

Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into business with GR8 Things, Inc., in competition with Trendy. Etta is li?able for breach of

Accepted Answer

A)   no duty or rule
B)   the business judgment rule.
C)   the duty of care.
D)   the duty of loyalty.E) A) and B)
F) A) and C) D

Question 7

A corporation whose shares are held by relatively few persons is a close corporation.

Accepted Answer

A) True 
 B)False

Question 8

Bylaws are the internal rules of management for a corporation.

Accepted Answer

A) True 
 B)False

Question 9

In certain instances of fraud, a court may "pierce the corporate veil" to hold the shareholders individually liable.

Accepted Answer

A) True 
 B)False

Question 10

Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coast's employees include its

Accepted Answer

A)   board of directors.
B)   incorporators.
C)   officers.
D)   shareholders.E) B) and D)
F) B) and C)

Question 11

Yellowbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid in?come taxes at the corporate level. To qualify, Yellowbox must

Accepted Answer

A)   be located in the United States.
B)   have more than one hundred shareholders.
C)   be a non-profit corporation.
D)   have more than one class of stock.E) All of the above
F) None of the above

Question 12

A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.

Accepted Answer

A) True 
 B)False

Question 13

A merger and a consolidation are not two legally distinct proceedings.

Accepted Answer

A) True 
 B)False

Question 14

An alien corporation is a corporation formed in another country.

Accepted Answer

A) True 
 B)False

Question 15

Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery Corporation. As directors, they may not

Accepted Answer

A)   authorize major corporate policy decisions.
B)   decide to issue stock and bonds, and declare dividends.
C)   select and remove corporate officers.
D)   subordinate the corporation's welfare to their personal interests.E) B) and C)
F) None of the above

Question 16

A state constitution may resolve a conflict among documents involving a corporation.

Accepted Answer

A) True 
 B)False

Question 17

Painless Dental Equipment Company is incorporated in Colorado. In Wyoming, Painless is

Accepted Answer

A)   a domestic corporation.
B)   a foreign corporation.
C)   an alien corporation.
D)   a non-entity.E) A) and B)
F) A) and C) B

Question 18

A corporation's officers and other executive employees are hired by corporate shareholders.

Accepted Answer

A) True 
 B)False

Question 19

A close corporation can operate as an S corporation.

Accepted Answer

A) True 
 B)False

Question 20

Lyla is a common shareholder in Norman's Nutty Nuts Corporation. As a common shareholder, Lyla is

Accepted Answer

A)   guaranteed regular payments of dividends.
B)   not guaranteed any payments of dividends.
C)   not given any voting rights.
D)   liable for all of Norman's Nutty Nuts's debts.E) A) and C)
F) All of the above

Exam 20: Corporations

DeFazio's Italian Restaurants, Inc., holds a shareholders' meeting. Corporate business matters are presented at the meeting in the form of

Correct AnswerverifiedA

Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is

Correct AnswerverifiedShow Answer

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This transaction was

Correct AnswerverifiedShow Answer

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with

Correct AnswerverifiedShow Answer

State laws regarding corporations are uniform.

Correct AnswerverifiedShow Answer

Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into business with GR8 Things, Inc., in competition with Trendy. Etta is li?able for breach of

Correct AnswerverifiedD

A corporation whose shares are held by relatively few persons is a close corporation.

Correct AnswerverifiedShow Answer

Bylaws are the internal rules of management for a corporation.

Correct AnswerverifiedShow Answer

In certain instances of fraud, a court may "pierce the corporate veil" to hold the shareholders individually liable.

Correct AnswerverifiedShow Answer

Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coast's employees include its

Correct AnswerverifiedShow Answer

Yellowbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid in?come taxes at the corporate level. To qualify, Yellowbox must

Correct AnswerverifiedShow Answer

A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.

Correct AnswerverifiedShow Answer

A merger and a consolidation are not two legally distinct proceedings.

Correct AnswerverifiedShow Answer

An alien corporation is a corporation formed in another country.

Correct AnswerverifiedShow Answer

Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery Corporation. As directors, they may not

Correct AnswerverifiedShow Answer

A state constitution may resolve a conflict among documents involving a corporation.

Correct AnswerverifiedShow Answer

Painless Dental Equipment Company is incorporated in Colorado. In Wyoming, Painless is

Correct AnswerverifiedB

A corporation's officers and other executive employees are hired by corporate shareholders.

Correct AnswerverifiedShow Answer

A close corporation can operate as an S corporation.

Correct AnswerverifiedShow Answer

Lyla is a common shareholder in Norman's Nutty Nuts Corporation. As a common shareholder, Lyla is

Correct AnswerverifiedShow Answer

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D

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