Please answer the following questions

Henry wants to open a new business and is considering operating as either a sole proprietorship or a corporation. He tells his lawyer, Julia, that he has heard it is much better to incorporate because you save a lot of money in federal income taxes. He asks if this is true. Julia indicates incorporation is clearly the way to go to reduce federal income taxes. Is she correct? 0 Maybe, depending on the province the two are located in O No, because there is no difference in taxation for any business type O Yes, because shareholders always get the benefit of deferred taxation of investments 0 No, because the federal government has removed many of the distinctions between business organization types for income tax purposes 0 Yes, because proprietorships are taxed as personal income, which is always more expensive The letters patent method of incorporation O is the most common method. 0 requires the filing of articles of incorporation. O grants the successful petitioner articles of association. 0 requires the filing of a memorandum of association. 0 is declining in use. Which of the following statements is false about the taxation benefits of incorporation? 0 Federal tax reform has changed the taxation of businesses, making all types of businesses have similar tax rules. 0 Incorporation is always the best business organization for tax purposes at the federal level. 0 Federal tax reform has removed some of the tax benefits of incorporation. 0 Tax reform has changed the tax benefits of incorporation. O Shareholders still benefit from delayed taxation because of incorporation. Why is incorporation the most expensive way to operate a business? 0 There are incorporation costs, higher operation costs, recordkeeping costs, and more governmental regulation. 0 There are costs to incorporate and recordkeeping expenses. 0 Paying the directors and officers of a corporation increases the expense of running the corporation. 0 There are incorporation costs, higher operation costs, recordkeeping costs. higher salaries, and more governmental regulation. 0 Keeping all the shareholders informed about the business and happy with its progress is costly. Do all corporations have the same capacity to contract as a natural person? 0 No. Corporations are not people and so do not have the same capacity. 0 No. A corporation created by a special act of the legislature or Parliament can have a limited area it can operate in. O No. Corporations created by registration have limited capacity to contract. 0 Yes. Corporations are always treated the same as a natural person. Yes. Even corporations created by statute can act the same as other types of corporations. Which of the following is not normally a right of a preferred stockholder? O The right to vote on any matter 0 The right of first repayment to shareholders on the dissolution of the company 0 The right to a promised set dividend every year (assuming the company declares any dividend) O The right to vote on matters affecting his rights 0 The right to collect back dividends for any years the company did not declare them What are the main differences between shareholders and bondholders of a corporation? 0 O O O O A shareholder, as a creditor, has the right to demand repayment while the bondholder, an investor, does not. A shareholder helps manage the corporation while a bondholder approves the shareholder's decisions. A shareholder has the right to repayment but no voting rights while a bondholder is a voting participant in the corporation. A shareholder is a voting participant in the corporation without the right to demand payment while a bondholder is a creditor without voting rights. A shareholder has a right to an annual dividend while a bondholder has the right to repayment on set terms. Edward is a local director of a multinational corporation. The corporation has operated in Canada for twelve years without paying federal taxes and has performed various negligent acts. The corporation fails. What is Edward's personal liability? 0 Edward is not personally liable for any corporate obligation. 0 Edward is personally liable for the back taxes but not the corporation's negligence. Edward is personally liable for the back taxes but only up to the total benefit he had received from the corporation. 0 Edward is personally liable for the corporation's negligent acts because of the agency relationship. Edward is personally liable for the corporation's back taxes and negligent acts. Before a company can sell shares, it must have a prospectus which discloses the important information. The person who participates in the initial set-up of the corporation and creation of this prospectus is the O lawyer for the corporation. 0 promoter. corporation. 0 O prospectus maker. 0 CEO of the corporation. Which of following is not a record that must be available to shareholders of a corporation? O A list of all the people who hold debentures The minutes of the last five shareholders' meetings The articles of incorporation A list of all corporate officers 0000 The actual accounting books A corporation has declared both preferred and common dividends the past two years. The preferred stock has a promised annual dividend of one dollar per share. This year the corporation does not declare a dividend. Which of the following responses is valid? 0 The preferred shareholders sue for their promised dividend. The shareholders vote out the board of directors. 0 The shareholders sue for oppression because there was an expectation of income. O The shareholders sue to force payment of the dividend. O The shareholders sue demanding the court uphold their right to the declaration of an annual dividend. Which of the following is not true about corporation dissolution? O The board of directors can voluntarily dissolve a corporation. 0 Winding-up is required for small corporations. 0 The dissolution process can be completed through the winding-up process set forth in statutes. 0 The dissolution process can be started by a court order. 0 Dissolution can be involuntary. What is a common way that a corporation can be dissolved with minimal effort? Failure to pay debts leading to bankruptcy Following the winding-up procedure 0 Publishing a notice of dissolution O No longer transacting any business Failure to file annual returns 0 What is the difference between selling the shares and selling the assets to end a business? 0 When selling the shares, the corporation still exists and is bound by its contracts while when selling the assets, the purchaser is only bound by liens on those assets. Selling the shares changes the ownership of the corporation while selling the assets does nothing to its business. When selling shares, the corporation ceases to exist and the purchaser is only bound by liens on the assets while when selling the assets, the purchaser is bound by the corporation's contracts. There is no difference. Both result in corporate dissolution. O O O 0 Selling the shares results in the corporation having no business while selling the assets results in new ownership of the corporation