Which of the following is a requirement for the initial formation of a corporation?

an initial stock offering

a board of directors

a minute book

a charter

Assessment question

Which of the following provisions are typically in a charter for a corporation? Choose 2 answers.

the trade secrets of the corporation

the advertising plan for the corporation

the intended business purpose of the corporation

the name and address of the corporation's agent

Assessment question

A corporation that is formed in one state but does business in another state is referred to in the second state as:

a foreign corporation.

a domestic corporation.

a distant corporation.

an alien corporation.

Assessment question

What type of corporation is formed for the purpose of doing a public service instead of making money?

nonprofit

privately held

public

publicly held

Assessment question

Which type of corporation is taxed like a partnership, with shareholders paying personal income tax on business income?

C corporation

public corporation

S corporation

alien corporation

Assessment question

What documents spell out the powers of a corporation? Choose 2 answers.

de facto documentation

the charter (also called the articles of incorporation)

certificate of corporate power

the bylaws

Assessment question

What is true of the tax liability of C corporations?

C corporations pay income tax only on corporate income that has been distributed to the owners as dividends.

C corporations do not pay any taxes.

C corporations only pay taxes on income that has not been distributed as dividends.

C corporations pay taxes on profits at the corporate level.

Assessment question

How does the governance of a closely held corporation compare to the statutory model of corporate governance?

They are very similar, with directors having the most influence in both models.

They are very different, with shareholders having more influence in a closely held corporation than in the statutory model.

They are very different, with shareholders having less influence than directors in a closely held corporation and more influence in the statutory model.

They are very similar, with shareholders having the most influence on the corporate governance in both models.

Assessment question

In which of these situations might a court pierce the corporate veil? Choose 2 answers.

More than half of the officers have resigned or been fired due to low profits.

The corporation has borrowed money from a shareholder.

Personal and corporate money is mixed together in one account.

The corporation does not have sufficient capital to operate and meet its debts.

Assessment question

Who is liable for contracts entered into on behalf of the corporation before the corporation is formed?

the corporation

the promoter

no one, because that cannot happen

the Chief Executive Officer

Which of the following is a duty of both corporate directors and corporate officers?

purchasing stock in the company

making a full disclosure of potential conflicts of interest

limiting political endorsements to only candidates that the corporation supports

working at least forty hours per week for the corporation

Assessment question

Which of the following actions show a failure to uphold the duty of loyalty expected of corporate directors? Choose 2 answers.

retiring before age 65

running a small side business that competes with the corporation

using information that is not public knowledge to make a profit on purchases or sales of the company's stock

serving on a board of directors for one of the corporations' suppliers

Assessment question

A corporate officer, as an agent of the corporation, has a duty of loyalty to make decisions that will benefit: (Choose 2 answers.)

a subsidiary corporation.

the stockholders.

a charitable organization.

the corporation itself.

Assessment question

What principle protects corporate directors and officers from liability for bad decisions if they are made as honest mistakes rather than in negligence?

duty of judgment

reasonable culpability

no-fault liability

the business judgment rule

Assessment question

What is the role of directors in a corporation? Choose 2 answers.

The directors are trustees, holding title to the corporate property for the benefit of the corporation.

Each individual director has the authority to act as an agent for the corporation to make contracts.

Directors make policy decisions necessary for the management of the company.

The board of directors selects and removes the corporate officers.

Assessment question

The management responsibilities of the board of directors of a corporation include: (Choose 3 answers.)

serving on an audit committee to supervise the accountants who audit the company's financial records.

making financial decisions about when to declare dividends.

making personnel decisions on the executive level and setting compensation for officers.

authorizing corporate policy decisions such as pursuing new product lines.

Assessment question

In ordinary circumstances, when the corporate veil has not been pierced, a shareholder may be liable for:

a portion of corporate fines for environmental violations.

unpaid amounts on the shares held by that shareholder.

the actions of the board of directors.

a portion of the settlement in a class-action lawsuit.

Assessment question

Common shareholders have the right to vote on:

proposals for fundamental changes affecting the company such as mergers or liquidation.

price of stock.

when to pay dividends.

compensation for the officers.

Assessment question

Which of the following are rights of common shareholders? Choose 3 answers.

priority for having debts paid from the liquidating company's assets

transferable ownership

opportunity to inspect corporate books and records

voting on matters such as election of directors and proposals for mergers or liquidation

Assessment question

Along with a claim on assets, shareholders may also receive a portion of profits the company pays out in the form of a:

reinvestment.

proxy.

dividend.

capital gain.