Ch 9A

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Which of the following statements about corporations is true? A) An incorporator files articles of incorporation with the state government to create a corporation B) When a corporation's liabilities exceed its assets, its creditors can reach the personal assets of the shareholders C) A corporation need not establish books of accounts D) When an employee or director commits a tort or crime while conducting corporate business, the corporation is not liable for the consequences

A) An incorporator files articles of incorporation with the state government to create a corporation

Corporations distribute their aftertax income to their shareholders as __________ A) dividends B) exempt payments C) regulatory benefits D) fringe benefits

A) dividends

On termination of a corporation, which of the following has the highest priority for payment? A) Dividend arrearages owed to preferred stockholders B) Dividend arrearages owed to common stockholders C) Claims of officers D) Claims of creditors

C) Claims of officers

Which of the following statements is true of the formation of partnerships? A) Management in a partnership is highly centralized B) Annual meetings of the senior partners are required C) The co-owners of a partnership must intent to join in the sharing of risks and rewards via the active conduct of business D) Most partnership agreements are written

C) The co-owners of a partnership must intent to join in the sharing of risks and rewards via the active conduct of business

Although the law of partnerships originated in the common law, all states except ____ adopted the Uniform Partnership Act. A) South Carolina B) Rhode Island C) Mississippi D) Louisiana

D) Louisiana

Which of the following is a feature of a corporation? A) The requirement of offering common and preferred stock B) The requirement of holding annual board of directors and shareholder meetings C) The requirement of the officers to elect the corporate board of directors D) The requirement of filing the Articles of Incorporation with the federal government

D) The requirement of filing the Articles of Incorporation with the federal government

Common stockholders share all three property rights associated with stock ownership equally

False

Despite great concern, the Citizens Unites decision has had minimal impact on corporate political spending

False

For the purposes of insider trading, an insider is defined solely as an officer or director of the corporation

False

Online trading services provide professional guidance to investors.

False

Sole proprietorships are legal entities separate from their owners

False

The fraud-on-the-market theory requires proof of actual reliance on the issuer's material misstatement.

False

A partnership does not provide limited liability to its owners

True

A shareholder derivative suit can be brought by a minority shareholder, but any recovery inures to the corporation

True

Although shareholders are the owners of the corporation, control rests with the board

True

Corporations incur the disadvantage of double taxation

True

Equity holders' claims are satisfied after the creditors' claims

True

In a limited liability company, the owners are referred to as members

True

In a limited partnership, the general partners manage the business and are personally liable for all losses

True

In general, the creditors of a corporation cannot reach the personal assets of the shareholders to satisfy the corporation's obligations

True

In the context of the capital structure of corporations, equity capital has a long term horizon

True

Shareholders of closely held corporations may face the loss of their limited liability by applying the doctrine known as piercing the corporate veil

True

The law considers corporations as artificial persons

True

The owners of a corporation are called stockholders

True

Where mergers or direct acquisitions fail, a takeover can be attempted.

True


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