Question 1

Directors, but not officers, are fiduciaries of the corporation.

Accepted Answer

A) True 
 B)False

Question 2

The audit committee of a publicly held corporation is responsible for

Accepted Answer

A)  the selection, compensation, and oversight of accountants who audit the firm's financial records.
B)  interim business decisions between board meetings.
C)  dividends, amendments to the bylaws, and the issuance of stock.
D)  none of the choices.E) B) and D)
F) B) and C)

Question 3

Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely

Accepted Answer

A)  an ultra vires act.
B)  within the corporation's express powers.
C)  within the corporation's implied powers.
D)  allowable and proper as an act to profit corporate shareholders.E) B) and D)
F) None of the above

Question 4

Local Oil Inc. is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Mace, the majority shareholder, misappropriates company funds. The shareholders whose interests are injured by Mace's misconduct should

Accepted Answer

A)  have their shares appraised and be paid the fair market value for them.
B)  promote the transferability of the company's shares to outside persons.
C)  reorganize the firm into a sole proprietorship or partnership.
D)  hold a special shareholders' meeting to elect new directors.E) A) and C)
F) None of the above

Question 5

To pierce the corporate veil means to reveal the identity of its true owner.

Accepted Answer

A) True 
 B)False

Question 6

In many states, close corporations have more flexibility in determining their rules of operation.

Accepted Answer

A) True 
 B)False

Question 7

AstroStar Inc.'s board of directors consists of three members-Eckhart, Dolan, and Macero. At a regular board meeting, the board selects Galiard as president of the corporation. Later, an audit reveals that during his term as president he has openly embezzled $500,000 from AstroStar. The same audit reveals that the board knew when it selected Galiard that he had been previously convicted of embezzlement. Can the corporation hold directors Eckhart, Dolan, and Macero personally liable?

Accepted Answer

Directors are personally answerable to t...

Question 8

Agents and employees of Deco Arts Corporation and Echo Imitations Inc. are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so, how can they be punished?

Accepted Answer

Yes, the corporations can be held liable...

Question 9

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

Accepted Answer

A)  a benefit corporation.
B)  a publicly held corporation.
C)  no corporation-corporate shareholders' liability is limited.
D)  a close corporation.E) C) and D)
F) A) and C)

Question 10

The number of directors that serve on a corporate board is determined by its

Accepted Answer

A)  articles of incorporation.
B)  bylaws.
C)  board of directors.
D)  quorum.E) A) and C)
F) B) and C)

Question 11

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

Accepted Answer

A) True 
 B)False

Question 12

Holly is an officer of Indelible Inc. The board removes Holly in violation of an employment contract. Indelible may be liable for breach of

Accepted Answer

A)  contract.
B)  the business judgment rule.
C)  the duty of loyalty.
D)  none of the choices.E) A) and C)
F) All of the above

Question 13

An S corporation avoids taxes at

Accepted Answer

A)  none of the choices.
B)  the market level.
C)  the corporate level.
D)  the shareholder level.E) A) and B)
F) A) and C)

Question 14

When it comes to managing a corporation, the corporation relies on its board of directors and officers.

Accepted Answer

A) True 
 B)False

Question 15

Because bonds do not represent debt, they need never be repaid.

Accepted Answer

A) True 
 B)False

Question 16

The executive committee of a publicly held corporation handles

Accepted Answer

A)  the selection, compensation, and oversight of accountants who audit the firm's financial records.
B)  interim business decisions between board meetings.
C)  dividends, amendments to the bylaws, and the issuance of stock.
D)  none of the choices.E) A) and B)
F) All of the above

Question 17

When a vacancy occurs on a corporate board, how the position will be filled is most likely set forth in

Accepted Answer

A)  the corporation's articles or bylaws.
B)  shareholder proxies.
C)  the business judgment rule.
D)  the board's recorded minutes.E) A) and D)
F) C) and D)

Question 18

Medical and investment professionals network and pool funds to invest in Medical Online Consult Inc. This is

Accepted Answer

A)  venture capitalizing.
B)  crowdfunding.
C)  piercing the corporate veil.
D)  ultra vires .E) None of the above
F) A) and D)

Question 19

Funds invested in an existing corporation to buy and reorganize it, and possibly sell shares in the reorganized company in an initial public offering, are known as

Accepted Answer

A)  preferred shares of corporate stock.
B)  private equity capital.
C)  crowdfunds.
D)  corporate bonds.E) C) and D)
F) B) and D)

Question 20

Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by

Accepted Answer

A)  any third party.
B)  the state.
C)  a director, officer, or shareholder.
D)  any corporation with which it does business.E) A) and B)
F) A) and C)

Exam 37: Corporate Formation and Financing

Local Oil Inc. is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Mace, the majority shareholder, misappropriates company funds. The shareholders whose interests are injured by Mace's misconduct should

Correct Answer
verified

Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely

Correct Answer
verified

The number of directors that serve on a corporate board is determined by its

Correct Answer
verified

When a vacancy occurs on a corporate board, how the position will be filled is most likely set forth in

Correct Answer
verified

To pierce the corporate veil means to reveal the identity of its true owner.

Correct Answer
verified

Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by

Correct Answer
verified

Correct Answer
verified
Directors are personally answerable to t...
View Answer

Directors, but not officers, are fiduciaries of the corporation.

Correct Answer
verified

The audit committee of a publicly held corporation is responsible for

Correct Answer
verified

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

Correct Answer
verified

The executive committee of a publicly held corporation handles

Correct Answer
verified

In many states, close corporations have more flexibility in determining their rules of operation.

Correct Answer
verified

Medical and investment professionals network and pool funds to invest in Medical Online Consult Inc. This is

Correct Answer
verified

Agents and employees of Deco Arts Corporation and Echo Imitations Inc. are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so, how can they be punished?

Correct Answer
verified
Yes, the corporations can be held liable...
View Answer

Holly is an officer of Indelible Inc. The board removes Holly in violation of an employment contract. Indelible may be liable for breach of

Correct Answer
verified

Because bonds do not represent debt, they need never be repaid.

Correct Answer
verified

When it comes to managing a corporation, the corporation relies on its board of directors and officers.

Correct Answer
verified

Funds invested in an existing corporation to buy and reorganize it, and possibly sell shares in the reorganized company in an initial public offering, are known as

Correct Answer
verified

An S corporation avoids taxes at

Correct Answer
verified

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

Correct Answer
verified

Exam 37: Corporate Formation and Financing

Local Oil Inc. is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Mace, the majority shareholder, misappropriates company funds. The shareholders whose interests are injured by Mace's misconduct should

Correct AnswerverifiedShow Answer

Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely

Correct AnswerverifiedShow Answer

The number of directors that serve on a corporate board is determined by its

Correct AnswerverifiedShow Answer

When a vacancy occurs on a corporate board, how the position will be filled is most likely set forth in

Correct AnswerverifiedShow Answer

To pierce the corporate veil means to reveal the identity of its true owner.

Correct AnswerverifiedShow Answer

Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDirectors are personally answerable to t...View AnswerShow Answer

Directors, but not officers, are fiduciaries of the corporation.

Correct AnswerverifiedShow Answer

The audit committee of a publicly held corporation is responsible for

Correct AnswerverifiedShow Answer

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

Correct AnswerverifiedShow Answer

The executive committee of a publicly held corporation handles

Correct AnswerverifiedShow Answer

In many states, close corporations have more flexibility in determining their rules of operation.

Correct AnswerverifiedShow Answer

Medical and investment professionals network and pool funds to invest in Medical Online Consult Inc. This is

Correct AnswerverifiedShow Answer

Agents and employees of Deco Arts Corporation and Echo Imitations Inc. are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so, how can they be punished?

Correct AnswerverifiedYes, the corporations can be held liable...View AnswerShow Answer

Holly is an officer of Indelible Inc. The board removes Holly in violation of an employment contract. Indelible may be liable for breach of

Correct AnswerverifiedShow Answer

Because bonds do not represent debt, they need never be repaid.

Correct AnswerverifiedShow Answer

When it comes to managing a corporation, the corporation relies on its board of directors and officers.

Correct AnswerverifiedShow Answer

Funds invested in an existing corporation to buy and reorganize it, and possibly sell shares in the reorganized company in an initial public offering, are known as

Correct AnswerverifiedShow Answer

An S corporation avoids taxes at

Correct AnswerverifiedShow Answer

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
Directors are personally answerable to t...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Yes, the corporations can be held liable...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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