Acct 324 -Ch 38
All states recognize which of the following words as an indication of incorporation? (Check all that apply.) Multiple select question. Corporation Incorporated American Limited
Corporation Incorporated Limited
Stock that conveys preferences to its holder with respect to assets and dividends is known as ____ _____
preferred stock
A corporation that is created by private persons and does not have government duties is called a(n) _____ ______
private corporation
True or false: All states have the same laws in reference to incorporation.
false
The general public can invest in publicly held corporations by Multiple choice question. becoming partners in the corporation. purchasing stock in the corporation. filing a statement of intent with the Secretary of State's office. purchasing government T-bonds.
purchasing stock in the corporation.
If a corporation is deemed defective, then the: ________. Multiple choice question. shareholders will need to file for a corporate exemption to operate as a quasi-corporation corporation needs to file for equitable relief with the governor of the state corporation needs to file in a country other than the United State to cure the defect shareholders may be found personally liable for the corporation's actions
shareholders may be found personally liable for the corporation's actions
Each individual corporation's charter creates a contract between the corporation and the ______. Multiple choice question. general public state court shareholders
state
The only source for the existence and authority of a corporation exists in the corporation's articles of incorporation and in ______ statutes. Multiple choice question. federal incorporation international constitutional state incorporation
state incorporation
A corporation derives its authority from:_______. (Check all that apply.) Multiple select question. the UN charter on human rights state statutes on incorporation the articles of incorporation of the corporation the 4th Amendment to the United States Constitution
state statutes on incorporation the articles of incorporation of the corporation
Closely held corporations generally do not offer ____ to the general public, and are usually run by family members and friends.
stocks
Nonprofit corporations do not issue: ________. Multiple choice question. reinvestments into the business stocks services to members annual reports
stocks
When are the courts likely to pierce the corporate veil and deny the shareholders the protection of limited liability? (Check all that apply.) Multiple select question. A corporation was unable to pay dividends to its shareholders. A corporation lacked adequate capital when it initially formed. A corporation did not follow statutory mandates regarding corporate business. A corporatation invited subscribers to fund the venture.
A corporation lacked adequate capital when it initially formed. A corporation did not follow statutory mandates regarding corporate business.
What is the name of an individual who file the Articles of Incorporation with the state on behalf of the corporation? Multiple choice question. A corporationist A Chief Executive Officer An incorporator An organizer
An incorporator
Which of the following is the document a corporation files with the state explaining its organization and may include a restriction on the duration of the corporation? Multiple choice question. Articles of incorporation Corporate bylaws Operating agreement Resolution of the board
Articles of incorporation
Identify the words that can be used at the end of a firm's name to indicate that the firm is incorporated. (Check all that apply.) Multiple select question. Company Corporation Organization Inc. Business
Company Corporation Inc.
What is the term used when a court refuses to allow a corporation to claim it does not exist? Multiple choice question. Corporation by organization Corporation by estoppel Corporation by fiat Incorporation
Corporation by estoppel
What is the term used when a court refuses to allow a corporation to claim it does not exist? Multiple choice question. Corporation by organization Incorporation Corporation by estoppel Corporation by fiat
Corporation by estoppel
Identify a true statement about corporate taxation. (Check all that apply.) Multiple select question. Corporations receive tax deductions if they give dividends to their shareholders. Corporations must pay state taxes. Corporations do not pay federal taxes. Corporations are taxed by the government as they are treated as separate entities.
Corporations must pay state taxes. Corporations are taxed by the government as they are treated as separate entities.
What is the Latin term for a corporation from law or a lawful corporation? Multiple choice question. Family corporation International corporation De jure corporation Res ipsa loquitor corporation
De jure corporation
The most common way a corporation obtains financing is through the issuing and selling of which of the following types of securities? Multiple choice question. Derivatives and dirigibles Promissory notes and drafts Debt and equity Conditional and unconditional contracts
Debt and equity
Which state has more than half of the Fortune 500 companies choosing to incorporate there? Multiple choice question. New York Delaware Minnesota California
Delaware
A common stock shareholder is entitled to what amount of dividends? Multiple choice question. No dividends, they only go to preferred shareholders. Dividends in proportion to the amount of shares owned Dividends based on age of the shareholder Dividends based on tenure with the corporation
Dividends in proportion to the amount of shares owned
What type of securities give the purchaser a part ownership in the corporation? Multiple choice question. Equity securities Debt securities Draft securities Margin securities
Equity securities
If a corporation was incorporated in Delaware and did business in all 50 states, in which of the following states would the corporation be considered a foreign corporation? (Check all that apply.) Multiple select question. Florida New Hampshire Minnesota Delaware
Florida New Hampshire Minnesota
In the United States, corporations are protected from: _______. Multiple choice question. subpoenas and summons from federal courts, since incorporations take place at the state level no civil wrongs or criminal liability liability in state courts Fourth Amendment unreasonable searches
Fourth Amendment unreasonable searches
What is the term for the powers given to a corporation by the state to fulfill its express powers? Multiple choice question. Corporate agency Implied powers Respondeat superior Direct delegation
Implied powers
Where is an alien corporation incorporated? Multiple choice question. In the state of Delaware In Washington DC, which is not a state but a federal district In a country other than the United States In a state in which the corporation is doing business
In a country other than the United States
What terms describe individuals who agree to purchase stock in a new corporation? (Check all that apply.) Multiple select question. Investors Subscribers Organizers Promoters
Investors Subscribers
What is the term for substituting a third party for one of the two original parties in a contract? Multiple choice question. Organizing Incorporation Novation Synchronization
Novation
Who raises capital for corporations when they first form? Multiple choice question. Organizers Chief Executive Officers Promoters Executors
Promoters
Which of the following is implied power that a corporation is typically granted? Multiple choice question. Power to make charitable donations Power given in the statement of corporate purpose in the articles of incorporation Power to make contracts Power to disregard articles of incorporation is the resulting actions help pay higher dividends to the shareholders
Power given in the statement of corporate purpose in the articles of incorporation
Identify the express powers that corporations are typically given by state statute? (Check all that apply.) Multiple select question. Power to void a contract Power to acquire property Power to take actions necessary to execute express powers Power to lend money
Power to acquire property Power to lend money
What class of stockholder receives preferences in the distribution of assets and dividends of a corporation? Multiple choice question. Insider shareholders International shareholders Common stock shareholders Preferred stock shareholders
Preferred stock shareholders
What type of corporation is founded by private persons? Multiple choice question. Secret corporation Public corporation Private corporation Free corporation
Private corporation
What limitations exist when professionals, like doctors, form a corporation? Multiple choice question. Professionals are not allowed to incorporate in several states, including Delaware. Professionals can only incorporate as a not-for-profit corporation. Professionals cannot escape personal liability based on the theory of malpractice. Professionals are subject to federal regulation and, therefore, must request and receive the federal government's approval to incorporate.
Professionals cannot escape personal liability based on the theory of malpractice.
_______ is the term used when the state challenges the legality of a de facto corporation. Multiple choice question. De jure Estoppel De facto Quo warranto
Quo warranto
What is the term that describes when corporations withhold profits to reinvest within the corporation? Multiple choice question. Corporate deduction Retained earnings Articles of incorporation Merger buy
Retained earnings
Rowena's company signs a contract with ABZ Inc. to supply the company with 20,000 packaging boxes. Rowena later novates the contract to Steven's company. Which of the following is true in the given scenario? (Check all that apply.) Multiple select question. Rowena's company's rights are terminated. Steven's company becomes liable to fulfill the duties in the contract. A new set of duties are incorporated in the contract Rowena's company is still liable to fulfill the contract.
Rowena's company's rights are terminated. Steven's company becomes liable to fulfill the duties in the contract.
S Corporations are taxed in what way by the government? Multiple choice question. S corporations are exempt from both state and federal taxes. S corporations are taxed as partnerships and profits are reported as personal income. S corporations pay federal income tax only if they profit more than $1,000,000. S corporations are taxed as corporations, both at the federal and the state level.
S corporations are taxed as partnerships and profits are reported as personal income.
At the first organizational meeting for a corporation, who adopts a set of bylaws that govern the corporation's internal management? Multiple choice question. Sympathizers The Secretary of State Shareholders The Secretary of Commerce
Shareholders
To what extent are shareholders liable for the actions of a corporation? Multiple choice question. Shareholders are never personally liable for any actions of a corporation; all money and assets of a shareholder are protected. Shareholders are personally liable for the wrongs of a corporation to the limit they have invested in the corporation. Shareholders are not liable to any extent. Shareholders are 100% personally liable for all the actions of a corporation.
Shareholders are personally liable for the wrongs of a corporation to the limit they have invested in the corporation.
To what extent are shareholders liable for the actions of a corporation? Multiple choice question. Shareholders are not liable to any extent. Shareholders are personally liable for the wrongs of a corporation to the limit they have invested in the corporation. Shareholders are never personally liable for any actions of a corporation; all money and assets of a shareholder are protected. Shareholders are 100% personally liable for all the actions of a corporation.
Shareholders are personally liable for the wrongs of a corporation to the limit they have invested in the corporation.
Who establishes the requirements for corporate formation? Multiple choice question. Federal courts State incorporation statutes Federal incorporation statutes The Supreme Court
State incorporation statutes
Who issues a certificate of incorporation? Multiple choice question. The organizer of the corporation The President of the United States The registered agent The Secretary of State
The Secretary of State
Who appoints officers to manage the day-to-day business of a corporation? Multiple choice question. The court The state The board of directors The shareholders
The board of directors
What happens if corporate directors or officers of a corporation withdraw or die? Multiple choice question. The corporation assets revert to the state. The assets of the corporation are liquidated and the proceeds are distributed among the shareholders. The corporation continues to exist. The corporation is deemed a nonentity.
The corporation continues to exist.
Who is liable when agents of a corporation commit torts and crimes? Multiple choice question. The state where the corporation is incorporated will be liable. The corporation is liable for the actions of its agents. Only the agents will be liable; there is no corporate responsibility for its agents. The corporation is liable for the crimes of its agents, but not the torts.
The corporation is liable for the actions of its agents.
What are some requirements that must be met by a S corporation? (Check all that apply.) Multiple select question. The corporation must be a domestic corporation. The corporation must have at least one nonresident alien as a shareholder. The corporation must operate in more than one state. The corporation cannot have more than 100 shareholders.
The corporation must be a domestic corporation. The corporation cannot have more than 100 shareholders.
If a corporation makes a profit, then who pays the taxes on that profit? Multiple choice question. The corporation will be taxed by the state and federal authorities. The Board of Directors of the corporation will report any profit on their taxes. The shareholders will report any profit of a corporation on their tax returns to state and federal authorities. A corporation is exempt from state and federal taxes.
The corporation will be taxed by the state and federal authorities.
If all the shareholders of a corporation die, then what happens to the corporation? Multiple choice question. The corporation ends once all the current shareholders have passed away. The corporation will continue to exist; the passing of its owners will not affect the life of a corporation. The corporation will immediately be forced into a bankruptcy estate and all its assets will be liquidated. The assets of the corporation escheat to the state.
The corporation will continue to exist; the passing of its owners will not affect the life of a corporation.
Under which doctrine are corporations are liable for torts and crimes committed by their agents during the scope of their employment? Multiple choice question. The doctrine of respondeat superior The doctrine of res ipsa loquitur The doctrine of forum non conveniens The doctrine of ultra vires
The doctrine of respondeat superior
Who creates a public corporation? Multiple choice question. A board of directors of a corporation that determines to make the corporation focused on public projects The government -- either a state or federal governmental entity A group of citizens who decides that the government needs to do a particular thing. Shareholders who have invested the capital to start the corporation
The government -- either a state or federal governmental entity
Who creates a public corporation? Multiple choice question. The government -- either a state or federal governmental entity Shareholders who have invested the capital to start the corporation Reason: Only the government can create a public corporation. A board of directors of a corporation that determines to make the corporation focused on public projects A group of citizens who decides that the government needs to do a particular thing.
The government -- either a state or federal governmental entity
What are some of the express powers that corporations are typically given by state statute? (Check all that apply.) Multiple select question. The power to ignore discrimination laws as they relate to typical employers The power to sue and be sued The power to have perpetual existence The power not to have to pay state and federal taxes on profits
The power to sue and be sued The power to have perpetual existence
Identify an instance in which the limited liability of corporate shareholders is unlikely to exist. Multiple choice question. The corporation has an employment contract with the board of directors. The shareholders act in an illegal or wrongful manner. The corporate officers emigrate to a nation other than the United States. The corporation loses shareholders a substantial amount of their investment.
The shareholders act in an illegal or wrongful manner.
Who elects the board of directors of a corporation? Multiple choice question. The corporate officers of a corporation The secretary of the state in which the business was incorporated The employees of a corporation The shareholders of a corporation
The shareholders of a corporation
Who is the only entity that can bring an action to challenge the legality of a de facto corporation? Multiple choice question. The federal government The shareholders The United Nations The state
The state
Shareholders may profit from investing in a public corporation in which of the following ways? (Check all that apply.) Multiple select question. Shareholders can receive personal bonuses for the help they provide. The value of the stock could rise, allowing the shareholders to make money by selling their shares in the corporation. Shareholders may receive dividends from the corporation. The government could send rebates based on the number of shares that an individual owns.
The value of the stock could rise, allowing the shareholders to make money by selling their shares in the corporation. Shareholders may receive dividends from the corporation.
Identify the true statements about corporations. (Check all that apply.) Multiple select question. They not legally separate from shareholders They are legal entities. They can mitigate liability by transferring it to shareholders. They assume responsibility for corporate actions
They are legal entities. They assume responsibility for corporate actions
Identify the true statements about corporations. (Check all that apply.) Multiple select question. They can mitigate liability by transferring it to shareholders. They assume responsibility for corporate actions They are legal entities. They not legally separate from shareholders
They assume responsibility for corporate actions They are legal entities.
Which of the following is true of retained earnings? (Check all that apply.) Multiple select question. They can increase the stock price of a corporation. They are subject to double taxation. They are the profits that are distributed among the shareholders. They are reinvested in a corporation.
They can increase the stock price of a corporation. They are reinvested in a corporation.
Which of the following is true of corporations under US law? (Check all that apply.) Multiple select question. They can sue legal entities. They cannot be sued. They are not legal entities. They exist separately from their shareholders.
They can sue legal entities. They exist separately from their shareholders.
Identify a true statement about nonprofit corporations. Multiple choice question. They do not reinvest their profits in the business. They do not have shareholders. They do not make a profit. They do not provide services to their members.
They do not have shareholders.
Which of the following is true of common stockholders? (Check all that apply.) Multiple select question. They own a portion of a corporation. They have limited voting rights. They are entitled to corporate dividends in proportion to the number of shares they own. They receive a percentage of dividends associated with the face value of their stock.
They own a portion of a corporation. They are entitled to corporate dividends in proportion to the number of shares they own.
Identify the ways by which a shareholder can profit if the value of a public corporation increases. (Check all that apply.) Multiple select question. Through closely held stock Through dividends By selling their shares Through retained earnings
Through dividends By selling their shares
Where are Articles of Incorporation filed? Multiple choice question. With the Library of Congress With the United Nations, typically with the Office of International Commerce With the federal Department of Commerce With the state entity, typically the Secretary of State's office
With the state entity, typically the Secretary of State's office
In the context of corporations, subscribers are the people who ______. Multiple choice question. arrange for the capital, financing, and licenses establish the organization process begin the creation of a corporation agree to purchase stock in a new corporation
agree to purchase stock in a new corporation
A(n) ______ corporation is a business incorporated in another country. Multiple choice question. alien foreign international illegal
alien
For S corporations, no shareholder can be a nonresident ______. Multiple choice question. alien international domestic foreign
alien
A long-term loan that is issued by a corporation is called: _______. Multiple choice question. currency a bond stock a salary
bond
Loans to a corporation from another party are called ______. Multiple choice question. drafts promissory notes certificates of deposits bonds
bonds
Rules and regulations that govern the corporation's internal management are called ______. Multiple choice question. implied laws articles of incorporation incorporated rules bylaws
bylaws
A corporation is a(n) ______ corporation in all states other than the state in which it is incorporated. Multiple choice question. foreign national public alien
foreign
The document that confirms that a corporation is incorporated in a state and is authorized to conduct business is referred to as ______. Multiple choice question. certificate of incorporation articles of partnership business license articles of incorporation
certificate of incorporation
In the United States, the courts have extended ______ rights to corporations because the courts see them as "legal persons". Multiple choice question. immunity constitutional absolute transparency
constitutional
A defective corporation that has conducted business with a third party and therefore cannot deny its status as a third party to escape liability is called a ______. Multiple choice question. de jure corporation de facto corporation corporation by prescription corporation by estoppel
corporation by estoppel
If a corporation were to commit a civil wrong that made it liable to a third party, the third party should sue the: _______. Multiple choice question. shareholders (or owners) of the corporation, since they are personally liable for the actions of the company they own corporation, as it is the legal entity that committed the legal wrong secretary of state for allowing the entity to incorporate chief executive officer of the corporation, as he or she is personally liable for the legal wrongs of the corporation
corporation, as it is the legal entity that committed the legal wrong
A corporation that has not substantially met the requirements of the state incorporation statute, but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who believed it was properly incorporated is called a ______. Multiple choice question. quasi-corporation de facto corporation de jure corporation defective corporation
de facto corporation
A _______ corporation means literally a "corporation from law or a lawful corporation." Multiple choice question. de novo de facto de jure quo warranto
de jure
A corporation whose incorporation process included an error or omission is called a ______. Multiple choice question. de jure corporation quasi-corporation limited company defective corporation
defective corporation
An entity is a(n) ______ corporation in the state in which it is incorporated. Multiple choice question. alien foreign domestic public
domestic
A security that represents ownership in a corporation is called ______. Multiple choice question. fixed-income security certificate of deposit debt security equity security
equity security
Shareholders in closely held corporations are generally Multiple choice question. family and friends. the general public. only foreign residents. the government, either state or federal entity.
family and friends.
In order to be a de facto corporation, the promoters, subscribers and incorporator must have exhibited Multiple choice question. good faith in trying to follow the state's incorporation statue. a sincere effort to obtain a profit for the corporation. basic understanding for budgeting and accounting. a federal exemption to state incorporation.
good faith in trying to follow the state's incorporation statue.
In the context of medical malpractice, doctors in professional corporations ______. Multiple choice question. held personally liable can mitigate their liability by making the corporation liable. are not liable have limited liability to the extent of their investments
held personally liable
A public corporation is a corporation created by the government to ______. Multiple choice question. create job opportunities increase revenue boost economy help administer law
help administer law
A(n) ____ is an individual who applies to the state for incorporation on behalf of a corporation.
incorporator
Articles of Incorporation should include: (Check all that apply.) Multiple select question. name and addresses of the incorporaters. the name of the corporation. the address of the registered office. a business plan that describes how the corporation will be profitable
name and addresses of the incorporaters. the name of the corporation. the address of the registered office.
The stock of ______ corporations are available to the public. Multiple choice question. domestic publicly held privately held national
publicly held
A corporation is called a domestic corporation in the state that Multiple choice question. the corporation is incorporated in. most of the corporate officers are from. the corporation does the most business in. the corporation has the most shareholders in.
the corporation is incorporated in.
The articles of incorporation must include ______. Multiple choice question. the nature of the jobs that the corporation will create the name of the shareholders the details of all the employees the name of registered agent
the name of registered agent