Question 1

Sweetwater Corporation is incorporated in Texas. In that state, the firm is referred to as

Accepted Answer

A)   a domestic corporation.
B)   a foreign corporation.
C)   an alien corporation.
D)   a corporation by estoppel.E) A) and C)
F) A) and B)

Question 2

A corporation is recognized by law as a "person."

Accepted Answer

A) True 
 B)False

Question 3

Generally, a shareholder has no right to transfer his or her shares to another party without the consent of the corporation.

Accepted Answer

A) True 
 B)False

Question 4

Ridley is an officer of Sun Watts, Inc. Ridley knows that a Sun Watts engineer recently developed a new, inexpensive method for collecting, storing, and converting solar power into fuel. Ridley takes advantage of this information to buy Sun Watts stock from Taylor and, after the discovery is announced publicly, to sell the stock to Ulrich at a profit. Taylor claims that this is a violation of federal law. Is Taylor correct? If so, what federal law has Ridley violated? Explain.

Accepted Answer

Yes, Taylor is correct. Ridley has viola...

Question 5

A shareholder who has a preemptive right has the right to preempt the declaration of a dividend.

Accepted Answer

A) True 
 B)False

Question 6

Insider trading occurs when persons buy or sell securities on the basis of information that is not available to the public.

Accepted Answer

A) True 
 B)False

Question 7

Stocks, or equity securities, represent the purchase of ownership in the business firm.

Accepted Answer

A) True 
 B)False

Question 8

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely

Accepted Answer

A)   a corporation by estoppel.
B)   a de facto corporation.
C)   an S corporation.
D)   ultra vires .E) A) and B)
F) All of the above

Question 9

Shareholders must approve a merger of the corporation .

Accepted Answer

A) True 
 B)False

Question 10

Many states allow dividends to be paid out of corporate savings, but not out of undistributed net profits.

Accepted Answer

A) True 
 B)False

Question 11

Leo, the chief executive officer of Moon Resort Inc., intentionally understates the amount of the firm's debts in the prospectus for an issue of stock. Nell buys the stock and suffers a loss. Leo may be subject to

Accepted Answer

A)   criminal prosecution and a civil suit from Nell.
B)   negative publicity, but no prosecution or suit.
C)   only criminal prosecution.
D)   only a civil suit from Nell.E) A) and B)
F) A) and C)

Question 12

A corporation is owned by its

Accepted Answer

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

Question 13

The main government agency that administers the federal securities laws is

Accepted Answer

A)   the Securities and Exchange Commission.
B)   EDGAR.
C)   the New York Stock Exchange.
D)   the Federal Registration and Prospectus Agency.E) C) and D)
F) A) and B)

Question 14

A corporation enjoys many of the same rights under the law that natural persons enjoy.

Accepted Answer

A) True 
 B)False

Question 15

Spicy Wings Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Spicy undertakes business as a corporation. In this circumstance, Spicy's is most likely

Accepted Answer

A)   a corporation by estoppel .
B)   a de facto corporation .
C)   an S corporation .
D)   an ultra vires corporation.E) None of the above
F) A) and D)

Question 16

Acts of a corporation that are beyond the authority granted to it under its charter or under the statutes by which it was incorporated are ultra vires acts .

Accepted Answer

A) True 
 B)False

Question 17

Bonds

Accepted Answer

A)   represent the true ownership of a corporation.
B)   are equity securities.
C)   represent the long-term borrowing of funds by a corporation.
D)   provide a proportionate interest in a corporation with regard to control.E) A) and D)
F) A) and B)

Question 18

Sharon is a shareholder in Travel Adventures Inc. As a shareholder, Sharon

Accepted Answer

A)   must approve fundamental changes affecting the corporation.
B)   is responsible for the corporation's daily management.
C)   determines overall corporate strategy and policy.
D)   is personally liable for the corporation's debts.E) A) and D)
F) A) and C)

Question 19

Rob owns Solar Corporation. He uses one bank account for all of his personal money and the corporation's money to the extent that the corporation cannot be separately identified financially. This most likely warrants

Accepted Answer

A)   an adoption of new corporate bylaws.
B)   a recognition of de facto corporate status.
C)   a pierce of the corporate veil.
D)   a fundamental change to the articles of incorporation.E) B) and D)
F) A) and C)

Question 20

Burgers & Brew Inc. prepares its articles of incorporation. The articles are likely to include

Accepted Answer

A)   the internal rules of management.
B)   the process completed in soliciting prospective buyers.
C)   the social security number of all the directors.
D)   the corporation's registered agent.E) All of the above
F) C) and D)

Exam 29: Formation and Ownership of a Corporation

Insider trading occurs when persons buy or sell securities on the basis of information that is not available to the public.

Correct Answer
verified

A corporation enjoys many of the same rights under the law that natural persons enjoy.

Correct Answer
verified

Rob owns Solar Corporation. He uses one bank account for all of his personal money and the corporation's money to the extent that the corporation cannot be separately identified financially. This most likely warrants

Correct Answer
verified

Sharon is a shareholder in Travel Adventures Inc. As a shareholder, Sharon

Correct Answer
verified

Bonds

Correct Answer
verified

Acts of a corporation that are beyond the authority granted to it under its charter or under the statutes by which it was incorporated are ultra vires acts .

Correct Answer
verified

Many states allow dividends to be paid out of corporate savings, but not out of undistributed net profits.

Correct Answer
verified

Leo, the chief executive officer of Moon Resort Inc., intentionally understates the amount of the firm's debts in the prospectus for an issue of stock. Nell buys the stock and suffers a loss. Leo may be subject to

Correct Answer
verified

Correct Answer
verified
Yes, Taylor is correct. Ridley has viola...
View Answer

A corporation is recognized by law as a "person."

Correct Answer
verified

A corporation is owned by its

Correct Answer
verified

Stocks, or equity securities, represent the purchase of ownership in the business firm.

Correct Answer
verified

The main government agency that administers the federal securities laws is

Correct Answer
verified

A shareholder who has a preemptive right has the right to preempt the declaration of a dividend.

Correct Answer
verified

Spicy Wings Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Spicy undertakes business as a corporation. In this circumstance, Spicy's is most likely

Correct Answer
verified

Generally, a shareholder has no right to transfer his or her shares to another party without the consent of the corporation.

Correct Answer
verified

Sweetwater Corporation is incorporated in Texas. In that state, the firm is referred to as

Correct Answer
verified

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely

Correct Answer
verified

Shareholders must approve a merger of the corporation .

Correct Answer
verified

Burgers & Brew Inc. prepares its articles of incorporation. The articles are likely to include

Correct Answer
verified

Exam 29: Formation and Ownership of a Corporation

Insider trading occurs when persons buy or sell securities on the basis of information that is not available to the public.

Correct AnswerverifiedShow Answer

A corporation enjoys many of the same rights under the law that natural persons enjoy.

Correct AnswerverifiedShow Answer

Rob owns Solar Corporation. He uses one bank account for all of his personal money and the corporation's money to the extent that the corporation cannot be separately identified financially. This most likely warrants

Correct AnswerverifiedShow Answer

Sharon is a shareholder in Travel Adventures Inc. As a shareholder, Sharon

Correct AnswerverifiedShow Answer

Bonds

Correct AnswerverifiedShow Answer

Acts of a corporation that are beyond the authority granted to it under its charter or under the statutes by which it was incorporated are ultra vires acts .

Correct AnswerverifiedShow Answer

Many states allow dividends to be paid out of corporate savings, but not out of undistributed net profits.

Correct AnswerverifiedShow Answer

Leo, the chief executive officer of Moon Resort Inc., intentionally understates the amount of the firm's debts in the prospectus for an issue of stock. Nell buys the stock and suffers a loss. Leo may be subject to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYes, Taylor is correct. Ridley has viola...View AnswerShow Answer

A corporation is recognized by law as a "person."

Correct AnswerverifiedShow Answer

A corporation is owned by its

Correct AnswerverifiedShow Answer

Stocks, or equity securities, represent the purchase of ownership in the business firm.

Correct AnswerverifiedShow Answer

The main government agency that administers the federal securities laws is

Correct AnswerverifiedShow Answer

A shareholder who has a preemptive right has the right to preempt the declaration of a dividend.

Correct AnswerverifiedShow Answer

Spicy Wings Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Spicy undertakes business as a corporation. In this circumstance, Spicy's is most likely

Correct AnswerverifiedShow Answer

Generally, a shareholder has no right to transfer his or her shares to another party without the consent of the corporation.

Correct AnswerverifiedShow Answer

Sweetwater Corporation is incorporated in Texas. In that state, the firm is referred to as

Correct AnswerverifiedShow Answer

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely

Correct AnswerverifiedShow Answer

Shareholders must approve a merger of the corporation .

Correct AnswerverifiedShow Answer

Burgers & Brew Inc. prepares its articles of incorporation. The articles are likely to include

Correct AnswerverifiedShow Answer

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Yes, Taylor is correct. Ridley has viola...
View Answer

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