Question 1

Which of the following is true regarding Chinese Law?

Accepted Answer

A)   Under the three tiers of corporate power in China, the board of directors is the lowest, the board of supervisors makes up the second, and corporate officers compose the top tier.
B)   Under the three tiers of corporate power in China, the board of supervisors is the lowest, the board of directors makes up the second, and corporate officers compose the top tier.
C)   Under the three tiers of corporate power in China, corporate officers make up the lowest tier, the board of supervisors makes up the second, and the board of directors composes the top tier.
D)   Under the two tiers of corporate power in China, the board of directors is the lowest and corporate officers compose the top tier.
E)   Under the two tiers of corporate power in China, the board of supervisors is the lowest and corporate officers compose the top tier.F) None of the above
G) D) and E)

Question 2

Which of the following generally does not offer stock to the public?

Accepted Answer

A)   Alien corporations
B)   Foreign corporations
C)   Closely held corporations
D)   Carefully held corporations
E)   Minority shareholder controlled corporationsF) A) and E)
G) A) and D)

Question 3

The articles of incorporation determine who has the power to amend the corporate bylaws after the first organizational meeting.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is false regarding a nonprofit corporation?

Accepted Answer

A)   Nonprofit corporations provide services to their members.
B)   Nonprofit corporations do not have shareholders.
C)   A nonprofit corporation may not earn profits.
D)   Nonprofit corporations do not issue stock.
E)   Churches and charitable organizations are examples of nonprofit corporations.F) B) and C)
G) D) and E)

Question 5

Which of the following is a corporation that, with minor errors, has substantially met the requirements of the state incorporation statute?

Accepted Answer

A)   A de jure corporation
B)   A de facto corporation
C)   A corporation by estoppel
D)   A corporation by reservation
E)   An inactive corporationF) A) and D)
G) A) and E)

Question 6

"Shaky Bicycles." Rhonda, an incorporator who filed the articles of incorporation for ABC Corporation, a corporation set up to sell bicycles, incorrectly put the wrong street address in the document. Helen, a manufacturer of bicycle parts, had sold a number of parts to ABC Corporation. Unfortunately, the corporation was not making any profit, and Helen was not paid in a timely manner. She checked the status of the corporation and discovered Rhonda's error. Helen then claimed that the shareholders of ABC Corporation were personally liable to her. Bernice, another creditor of ABC Corporation, also claimed that a shareholder, Slick, was personally liable to her. Bernice alleged that Slick committed fraud against her when he told her that ABC Corporation was making large amounts of money, that if she would only loan $50,000 to the corporation he would marry her, and that the corporation would make so much money that she would be wealthy in six months. She loaned the funds, but the corporation has been unable to pay her. Slick told her that he is sorry, but that her only avenue of recovery is through the corporation.
-Assuming ABC's corporate status is in place, which of the following is Bernice's best theory, if any, in order to hold Slick personally liable to her?

Accepted Answer

A)   That the corporate veil should be pierced because Slick committed fraud through the corporation.
B)   That in equity Slick should be held personally liable.
C)   That Slick should be personally liable because of his status as a shareholder.
D)   That Slick should be personally liable because he acted on behalf of the corporation in soliciting the funds.
E)   Because of ABC's corporate status and her responsibility to investigate the situation, she will not be able to hold Slick personally liable to her.F) A) and D)
G) C) and E)

Question 7

"Nails." Mona and her friends Jack and Bobby, all U.S. citizens, want to open a nail salon. They would all like to avoid personal liability for debts of the business and/or wrongful acts of each other. They would also like to avoid taxation as much as possible. Mona is in favor of a corporation and asks if there is any problem with that form of business. Jack and Bobby say that they are concerned about double taxation with a corporation and that they are in favor of a partnership, even if personal liability is a concern. Mona said that she was concerned about the deductibility of losses if the corporate form was chosen. She did some research and suggested an S corporation to Jack and Bobby which she claimed would avoid the problem of double taxation.

-Which of the following is true regarding the concerns of Jack and Bobby regarding double taxation and Mona's suggestion regarding an S corporation?

Accepted Answer

A)   Mona's suggestion will not solve the issue of double taxation because with both a regular corporation and with an S corporation, the corporation is taxed on income and shareholders are taxed again on dividends they receive.
B)   Jack and Bobby are incorrect, and an S corporation is not needed for any double taxation issue because with both a general corporation and an S corporation, tax effects would be the same with the corporation being taxed on earnings and shareholders being taxed again on dividends.
C)   Mona is correct that S corporation shareholders report their income from the corporation only once, as personal income.
D)   Mona is correct in that double taxation may be avoided through the use of an S corporation, but this can be negated through taxation of dividends at the higher corporate rate regardless of the tax rate of the shareholder.
E)   Mona is correct that double taxation may be avoided through the use of an S corporation, but this may be negated by the fact that S corporations are taxed at a rate double that of general corporations.F) C) and E)
G) D) and E)

Question 8

Which of the following is not a type of bond that a corporation may issue?

Accepted Answer

A)   Unsecured
B)   Secured
C)   Equity
D)   Convertible
E)   IncomeF) C) and D)
G) All of the above

Question 9

Which of the following is an individual who applies to the state for incorporation on behalf of a corporation?

Accepted Answer

A)   A promoter
B)   An incorporator
C)   A facilitator
D)   An obtainer
E)   A certification analystF) B) and E)
G) A) and B)

Question 10

Which of the following is not a reason that a court would likely pierce the corporate veil?

Accepted Answer

A)   A corporation did not follow statutory mandates regarding corporate business.
B)   Shareholders' personal interests and corporate interests are commingled such that the corporation has no separate identity.
C)   Shareholders attempt to commit fraud through a corporation.
D)   A corporation has only de facto status.
E)   A corporation lacks adequate capital when initially formed.F) A) and E)
G) A) and B)

Question 11

No shareholder of an S corporation may be a nonresident alien.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following in the corporate formation process provides basic information about the corporation?

Accepted Answer

A)   The articles of subscription
B)   The agreement to promote
C)   The agreement to subscribe
D)   The agreement to incorporate
E)   The articles of incorporationF) B) and D)
G) A) and E)

Question 13

"Shaky Bicycles." Rhonda, an incorporator who filed the articles of incorporation for ABC Corporation, a corporation set up to sell bicycles, incorrectly put the wrong street address in the document. Helen, a manufacturer of bicycle parts, had sold a number of parts to ABC Corporation. Unfortunately, the corporation was not making any profit, and Helen was not paid in a timely manner. She checked the status of the corporation and discovered Rhonda's error. Helen then claimed that the shareholders of ABC Corporation were personally liable to her. Bernice, another creditor of ABC Corporation, also claimed that a shareholder, Slick, was personally liable to her. Bernice alleged that Slick committed fraud against her when he told her that ABC Corporation was making large amounts of money, that if she would only loan $50,000 to the corporation he would marry her, and that the corporation would make so much money that she would be wealthy in six months. She loaned the funds, but the corporation has been unable to pay her. Slick told her that he is sorry, but that her only avenue of recovery is through the corporation.
-Which of the following is the likely result of Helen's attempt to hold the shareholders primarily liable for her debt?

Accepted Answer

A)   She will likely be successful.
B)   She will be successful only if ABC Corporation proceeds to file for bankruptcy protection.
C)   She will be successful only if ABC Corporation is insolvent and remains so for at least six months.
D)   She will be successful only if ABC Corporation is insolvent and remains so for at least one year.
E)   She will likely be unsuccessful.F) C) and D)
G) B) and C)

Question 14

Which of the following was the result on appeal in King v. American Family Mutual Insurance Company; American Standard Insurance Company of Wisconsin, the case in the text involving whether for an injury occurring outside the state, personal jurisdiction in Montana could be asserted over the defending insurers who had appointed an agent for service of process there but had done no business in the state?

Accepted Answer

A)   That appointment of an agent for service of process does, standing alone, subject foreign corporations to jurisdiction in Montana for acts performed outside of Montana.
B)   That Montana law regarding appointment of an agent for service of process does not, standing alone, subject foreign corporations to jurisdiction in Montana for acts performed outside of Montana, at least when the corporations transact no business in the state.
C)   That regardless of whether an agent for service of process had been appointed, as a matter of law, insurers may be sued in any state in the U.S.
D)   That regardless of whether an agent for service of process had been appointed, as a matter of law, an insurer may only be sued in its state of incorporation.
E)   That regardless of whether an agent for service of process had been appointed, as a matter of law, an insurer may only be sued in the state in which its principal place of business is located.F) C) and D)
G) B) and E)

Question 15

"Nails." Mona and her friends Jack and Bobby, all U.S. citizens, want to open a nail salon. They would all like to avoid personal liability for debts of the business and/or wrongful acts of each other. They would also like to avoid taxation as much as possible. Mona is in favor of a corporation and asks if there is any problem with that form of business. Jack and Bobby say that they are concerned about double taxation with a corporation and that they are in favor of a partnership, even if personal liability is a concern. Mona said that she was concerned about the deductibility of losses if the corporate form was chosen. She did some research and suggested an S corporation to Jack and Bobby which she claimed would avoid the problem of double taxation.

-What type of tax treatment would an S corporation provide in regard to losses?

Accepted Answer

A)   Shareholders may deduct corporate losses from their personal income.
B)   Losses may only be deducted from the S corporation's taxes, not the shareholders' personal income.
C)   Losses may only be deducted from shareholders' personal income when the S corporation has shown a profit for at least two years.
D)   Losses may only be deducted from shareholders' personal income when the S corporation has shown a profit for at least three straight years.
E)   Losses may only be deducted from shareholders' personal income when the shareholder's gains from other endeavors exceed losses from the S corporation.F) B) and E)
G) B) and C)

Question 16

List the two implied corporate powers set forth in the text.

Accepted Answer

Following are implied powers of a corpor...

Question 17

Which of the following was the result on appeal in Federal Election Comm'n v. Beaumont, the case in the text in which the Supreme Court considered whether certain of the Federal Election Commission's regulations including, for example, regulating corporate political participation through the use of PAC's, constitute unconstitutional limits on speech?

Accepted Answer

A)   That the regulations impermissibly regulated speech because nonprofit corporations were treated differently than corporations operated on a for profit basis.
B)   That the regulations impermissibly regulated speech because unreasonable distinctions were made between exemptions granted to certain nonprofit corporations but not to others.
C)   That the regulations impermissibly regulated speech because, using a strict scrutiny standard, the regulations were overly broad.
D)   That the regulations permissibly regulated speech because nonprofit corporations, unlike corporations operated on a for profit basis, lack constitutional protection in the area of free speech.
E)   That the regulations permissibly regulated speech because the regulations allowed some control of campaign activity without jeopardizing the associational rights of advocacy organizations' members.F) B) and C)
G) None of the above

Question 18

Which of the following types of securities represent ownership in a corporation?

Accepted Answer

A)   Debt
B)   Equity
C)   Finance
D)   Formal
E)   CertifiedF) B) and D)
G) A) and D)

Question 19

Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Accepted Answer

A)   Stare decisis
B)   Res ipsa loquitur
C)   Respondeat superior
D)   Ab initio
E)   Actus reusF) All of the above
G) None of the above

Question 20

Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ____.

Accepted Answer

A)   Quo facto
B)   Quo jure
C)   Quo warranto
D)   Sine qua non
E)   Res ipsaF) C) and D)
G) All of the above

Exam 38: Corporations: Formation and Financing

List the two implied corporate powers set forth in the text.

Correct Answer
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Following are implied powers of a corpor...
View Answer

Which of the following is false regarding a nonprofit corporation?

Correct Answer
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Which of the following in the corporate formation process provides basic information about the corporation?

Correct Answer
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Correct Answer
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Which of the following is an individual who applies to the state for incorporation on behalf of a corporation?

Correct Answer
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Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Correct Answer
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Which of the following types of securities represent ownership in a corporation?

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is true regarding Chinese Law?

Correct Answer
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Which of the following is a corporation that, with minor errors, has substantially met the requirements of the state incorporation statute?

Correct Answer
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No shareholder of an S corporation may be a nonresident alien.

Correct Answer
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The articles of incorporation determine who has the power to amend the corporate bylaws after the first organizational meeting.

Correct Answer
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Correct Answer
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Which of the following is not a type of bond that a corporation may issue?

Correct Answer
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Which of the following is not a reason that a court would likely pierce the corporate veil?

Correct Answer
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Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ____.

Correct Answer
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Which of the following generally does not offer stock to the public?

Correct Answer
verified

Exam 38: Corporations: Formation and Financing

List the two implied corporate powers set forth in the text.

Correct AnswerverifiedFollowing are implied powers of a corpor...View AnswerShow Answer

Which of the following is false regarding a nonprofit corporation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following in the corporate formation process provides basic information about the corporation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an individual who applies to the state for incorporation on behalf of a corporation?

Correct AnswerverifiedShow Answer

Which of the following references the liability of corporations for torts and crimes committed by their agents during the scope of their employment?

Correct AnswerverifiedShow Answer

Which of the following types of securities represent ownership in a corporation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding Chinese Law?

Correct AnswerverifiedShow Answer

Which of the following is a corporation that, with minor errors, has substantially met the requirements of the state incorporation statute?

Correct AnswerverifiedShow Answer

No shareholder of an S corporation may be a nonresident alien.

Correct AnswerverifiedShow Answer

The articles of incorporation determine who has the power to amend the corporate bylaws after the first organizational meeting.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a type of bond that a corporation may issue?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a reason that a court would likely pierce the corporate veil?

Correct AnswerverifiedShow Answer

Only the state can challenge a de facto corporation's existence as a corporate entity in a suit called an action of ____.

Correct AnswerverifiedShow Answer

Which of the following generally does not offer stock to the public?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Following are implied powers of a corpor...
View Answer

Correct Answer
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