Question 1

All of the following are methods a corporation can capitalize except

Accepted Answer

A)   Borrow money.
B)   Sell equity in their operations.
C)   Require the shareholder to invest more money to keep their shares.
D)   Sell bonds C

Question 2

Which statement below is correct about a promoter's liability?

Accepted Answer

A)   It ceases to exist at the moment the corporation is formed.
B)   It continues for the duration of the existence of the corporation.
C)   It can only be terminated by judicial decree.
D)   It never can be terminated.

Question 3

Corporate formalities include all of the following except

Accepted Answer

A)   Filing annual reports.
B)   Disclosing information to shareholders.
C)   Keep the corporate bylaws up to date.
D)   Find investors. D

Question 4

Chaplan Corporation is a privately held corporation that wishes to offer ownership interests to the general public and commercial investors in order to generate more capital. This process is called

Accepted Answer

A)   Initial public offerings
B)   Public stock sales
C)   Open stock offerings
D)   Unlimited stock offerings

Question 5

Which statement is accurate about Delaware as it relates to taxation treatment of out of state corporations that incorporate in Delaware?

Accepted Answer

A)   They face no taxes.
B)   They face very favorable tax treatment.
C)   Delaware does not allow double taxation of corporations.
D)   Unless they sell products and services in Delaware, they may not benefit at all from Delaware tax treatment.

Question 6

A fictitious legal entity that exists as an independent individual separate from its owners is called a

Accepted Answer

A)   Partnership
B)   LLP
C)   LLC
D)   Corporation

Question 7

Which entity wrote the Revised Model Business Corporation Act (RMBCA) ?

Accepted Answer

A)   The federal legislature
B)   The federal Commerce Commission
C)   The American Law Institute
D)   The state legislatures

Question 8

The expiration date of a corporate bond is also called its __________.

Accepted Answer

A)   Date of return
B)   Maturity date
C)   Amortization date
D)   Fulfillment date

Question 9

Owners of nonvoting stock who receive a share of the corporate profits have received what is called a

Accepted Answer

A)   Profit-share
B)   Income distribution
C)   Dividend
D)   Gratuity

Question 10

A person who performs pre-incorporation duties on behalf of the forming corporation is called a __________.

Accepted Answer

A)   Promoter
B)   Incorporator
C)   Venture capitalist
D)   Principal

Question 11

Natural Corporation often fails to file the annual reports required by law. They also have failed to conduct annual shareholders meeting and their bylaws have been out of date and not followed for about four years. What could be the result of this malfeasance?

Accepted Answer

A)   Nothing. Those actions are voluntary.
B)   The shareholders could lose their investments.
C)   The courts could file criminal charges.
D)   The corporate veil could be pierced.

Question 12

A corporate bond issued in the amount of $500,000 is called a

Accepted Answer

A)   Baby bond
B)   Micro bond
C)   Small bond
D)   Miniature bond

Question 13

Jeff files the articles of incorporation to start BluSky Inc. What will be the next step?

Accepted Answer

A)   Sell shares of stocks on the New York Stock Exchange
B)   The principals will hold an organizational meeting to resolve any pending issues.
C)   The court will declare the corporate existence.
D)   The shareholders will create the bylaws.

Question 14

Do corporations have protection under the First Amendment for political speech?

Accepted Answer

A)   No because a corporation is not a person.
B)   No because the government has a substantial governmental interest in regulating corporate speech.
C)   Yes.
D)   Yes unless someone is offended by the speech. C

Question 15

In a minority of the states, the articles of incorporation are called the

Accepted Answer

A)   Bylaws
B)   Certificate
C)   Corporate charter
D)   Organization act

Question 16

Which body of a corporation has the duty to appoint and to remove the corporation's officers?

Accepted Answer

A)   The shareholders
B)   The executive officers
C)   The principals
D)   The board of directors

Question 17

What is an advantage of a Subchapter S corporation that a standard corporation does not have?

Accepted Answer

A)   It does not face double taxation.
B)   It does not having any filing requirement.
C)   The board does not have any fiduciary duties.
D)   It is inexpensive and easy to start up and run.

Question 18

The liability protection shareholders, directors, and officers of a corporation have from personal liability in case the corporation runs up large debts or suffers some liability is called

Accepted Answer

A)   Cone of silence
B)   Corporate veil
C)   Liability shield
D)   Bubble of protection

Question 19

The United States Postal System is an example of what type of corporation?

Accepted Answer

A)   Nonprofit
B)   Public
C)   Professional
D)   Publicly traded

Question 20

Space X filed its articles of incorporation in Delaware, but its principal place of business is in Texas. In which state is Space X a domestic corporation?

Accepted Answer

A)   Delaware
B)   Texas
C)   Both Texas and Delaware
D)   Whichever state the promoters choose as the domestic state.

Exam 30: Corporations: Formation and Organization

All of the following are methods a corporation can capitalize except

Correct AnswerverifiedC

Which statement below is correct about a promoter's liability?

Correct AnswerverifiedShow Answer

Corporate formalities include all of the following except

Correct AnswerverifiedD

Chaplan Corporation is a privately held corporation that wishes to offer ownership interests to the general public and commercial investors in order to generate more capital. This process is called

Correct AnswerverifiedShow Answer

Which statement is accurate about Delaware as it relates to taxation treatment of out of state corporations that incorporate in Delaware?

Correct AnswerverifiedShow Answer

A fictitious legal entity that exists as an independent individual separate from its owners is called a

Correct AnswerverifiedShow Answer

Which entity wrote the Revised Model Business Corporation Act (RMBCA) ?

Correct AnswerverifiedShow Answer

The expiration date of a corporate bond is also called its __________.

Correct AnswerverifiedShow Answer

Owners of nonvoting stock who receive a share of the corporate profits have received what is called a

Correct AnswerverifiedShow Answer

A person who performs pre-incorporation duties on behalf of the forming corporation is called a __________.

Correct AnswerverifiedShow Answer

Natural Corporation often fails to file the annual reports required by law. They also have failed to conduct annual shareholders meeting and their bylaws have been out of date and not followed for about four years. What could be the result of this malfeasance?

Correct AnswerverifiedShow Answer

A corporate bond issued in the amount of $500,000 is called a

Correct AnswerverifiedShow Answer

Jeff files the articles of incorporation to start BluSky Inc. What will be the next step?

Correct AnswerverifiedShow Answer

Do corporations have protection under the First Amendment for political speech?

Correct AnswerverifiedC

In a minority of the states, the articles of incorporation are called the

Correct AnswerverifiedShow Answer

Which body of a corporation has the duty to appoint and to remove the corporation's officers?

Correct AnswerverifiedShow Answer

What is an advantage of a Subchapter S corporation that a standard corporation does not have?

Correct AnswerverifiedShow Answer

The liability protection shareholders, directors, and officers of a corporation have from personal liability in case the corporation runs up large debts or suffers some liability is called

Correct AnswerverifiedShow Answer

The United States Postal System is an example of what type of corporation?

Correct AnswerverifiedShow Answer

Space X filed its articles of incorporation in Delaware, but its principal place of business is in Texas. In which state is Space X a domestic corporation?

Correct AnswerverifiedShow Answer

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C

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D

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C

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