BLW 302 CH 18 True False
False
A C corporation is the same as an S corporation for tax purposes.
False
A LLP can be created by implication.
True
A copy of the voting tool must be on file in the corporate records.
True
A corporation is only a domestic corporation in its state of incorporation.
False
A limited liability company can be created informally.
False
A limited partnership can exist by implication.
True
A merger requires a board resolution and shareholder approval.
True
A partner owes the partnership and the other partners the same fiduciary duty that an agent owes to a principal.
False
A partner's interest in a partnership is not transferable.
True
A partnership by estoppel arrises when actions lead a third party to believe a partnership exists.
False
A partnership can only be formed voluntarily.
False
A partnership must file a separate tax return and pay taxes on its income.
False
A proxy is valid for 6 months while a voting pool membership is limited to 11 months.
False
A tenancy in partnership does not carry rights of survivorship.
True
All owners in an LLP have limited liability.
False
An S corporation is created as an LLC.
False
An assignment of a limited partner's interest terminated the limited partnership.
True
An inadequately capitalized corporation can have its corporate veil pierced.
True
Any shareholder can demand access to the corporate books and records.
True
Appraisal rights are given only to dissenting shareholders.
False
Appraisal rights are given when a corporation is selling real estate assets and the decision to sell by the board is not unanimous.
False
Boards cannot rely on outside experts in decision making.
True
Bylaws provide the requirements for meetings and voting.
False
Close corporations are generally publicly traded.
True
Close corporations have less formality in their operational requirements.
True
Corporations pay double taxes, on income and shareholders on dividends.
True
Cumulative preferred stock carries a guarantee of a dividend.
False
D/B/A means domestic business association and is suggested for partnership use for clarity.
False
Directors are personally liable for errors in business judgment.
False
Dissolution of a partnership is termination of a partnership.
True
Each partner has an equal right to management of a partnership.
True
In a limited partnership, there must be at least one general partner.
True
In states that allow LLPs, if the filing procedures are not followed, the business form defaults to a general partnership.
False
Incorporators are not liable for contracts entered into before incorporation.
False
It is fraud to form a corporation to avoid personal liability.
True
LLCs have existed in Europe and South America prior to their existence in the U.S.
False
Lawyers for corporations are not required to reveal investigations of misconduct in the corporation to the CEO.
False
Lawyers for corporations are required to report misconduct by the corporation to the SEC after they have exhausted all means for internal correction.
True
Limited liability companies, limited liability partnerships, general partnerships, sole proprietorships and S corporations all have flow-through income and loss provisions for tax purposes.
True
Limited partners can consult an advise the general partner and still retain limited liability.
False
Limited partners can take a management role and remain limited partners.
True
Limited partners have liability to the amount of their contribution to the partnership.
False
Limited partners who act as guarantors for partnership notes lose their limited partner states.
False
Limited partners' profits and loses are allocated equally.
False
Limited partnership interests are generally not transferable.
True
Limited partnerships are taxed the same way as as general partnerships.
False
Members of limited liability companies have no right to vote on who should manage their companies.
True
Most states allow LLCs to exist for about 30 to 40 years.
True
New members are admitted to an LLC only with approval by a majority of existing members.
False
Novation and ratification have the same effect on promoters' pre-incorporation contracts.
False
Only the capital (property, cash, or services contributed to the partnership) is at risk in a partnership.
True
Only the general partner in a limited partnership has personal liability.
True
Owners of limited liability companies enjoy pass-through treatment of income and loses.
False
Parent corporations can never be held liable for the environmental clean-up costs of subsidiaries.
False
Partners by implication cannot share profits.
True
Piercing the corporate veil has been used for purposes of imposing CERCLA liability.
False
Pooling agreements are the same as voting trusts.
False
Shareholders generally elect the officers of the corporation.
True
Sharing of profits is prima facie evidence that a partnership exists.
False
Stock transfer restrictions are void.
False
Subchapter S or S Corporation shareholders have personal liability for corporate debts.
False
The MBCA is as widely adopted in the states as the UPA.
False
The RULPA, the update of the ULPA, was created in 2005 and has been adopted by slightly over half the states.
True
The articles of incorporation must include the capital stock structure of the corporation.
True
The corporate opportunity doctrine requires directors to first present related business opportunities to the corporation.
True
The corporate veil can be pierced for inadequate capitalization.
True
The corporate veil liability theory has been applied in situations that involve environmental clean-up issues.
False
The income of the sole proprietor's business is reported as a separate entity's income.
False
The joint venture form and its requirements are very consistent throughout the world.
True
The sale of the goodwill of a partnership requires unanimous consent.
True
The sole proprietor's personal assets are subject to business creditor attachment.
True
The statutory agent is the party who will be served with lawsuits against the corporation.
True
There are no formal requirements for forming a sole proprietorship.
True
Under Sarbanes-Oxley, codes of ethics must cover financial reporting standards.
True
Under Sarbanes-Oxley, current employees are not considered INDEPENDENT for purposes of board structure.
True
Under Sarbanes-Oxley, loans to corporate officers are prohibited.
False
Under Sarbanes-Oxley, the majority of members of the audit committee must be independent directors.
False
Under the RUPA, partners are jointly and severally liable for all obligations.
True
Upon termination of both limited and general partnerships, outside creditors have first priority in terms of asset distribution.
False
Watered shares are shares for which the purchaser did pay more than par but less than full market value.
False
While the UPA was adopted in almost all states, RUPA has been adopted by all states since 2006.
