legal final
Mayflower Trucking Inc. incorporates and issues 1000 shares of common stock. The articles of incorporation of Mayflower Trucking grants shareholders preemptive rights. Shawn owns 100 shares of Mayflower stock. If Mayflower issues 500 more shares of common stock, Shawn has the right to purchase: 500 shares. 50 shares. 10 shares. 100 shares.
50 shares
What is a tender offer? The shareholders of the acquiring corporation purchase all of the assets of the target corporation. The shareholders of the acquiring corporation offer their shares for sale to shareholders of the target corporation. An acquiring corporation asks shareholders of the target corporation to offer their stock for sale. The shareholders of a target corporation form alliances and via shareholder voting eliminate the board of directors so that they may offer the positions to members of the acquiring corporation.
An acquiring corporation asks shareholders of the target corporation to offer their stock for sale.
Which of the following is a defense in which the target corporation sells of its most valuable or desirable asset? Pac-Mac Greenmail Crown Jewel aka Scorched Earth White Knight
Crown Jewel aka Scorched Earth
Which of the following are considered "persons" who may be a limited partner? Choose 3 answers. A general partner in the same partnership. A trust A natural person A corporation
A trust A natural person A corporation
Which of the following are essential elements of a partnership? Choose 2 answers. All members have signed a written partnership agreement. The name must include the word "partnership." All members have equal right to be involved in the management of the business. Profits and losses are shared among the members.
All members have equal right to be involved in the management of the business. Profits and losses are shared among the members.
What is true of the tax liability of C corporations? C corporations do not pay any taxes. C corporations pay income tax only on corporate income that has been distributed to the owners as dividends. C corporations only pay taxes on income that has not been distributed as dividends. C corporations pay taxes on profits at the corporate level.
C corporations pay taxes on profits at the corporate level.
Officers and directors owe which of the following duties to the corporation? Choose 2 answer choices. Duty of Compensation Duty of Care Duty of Loyalty Duty of Good Decisions
Duty of Care Duty of Loyalty
Partners have which of the following duties? Choose 3 answers. Fiduciary duties Litigating on behalf of the partnership Capital contribution Record keeping
Fiduciary duties Capital contribution Record keeping
Which of the following are advantages of operating as a partnership? Choose 2 answers. Any partner may add a new partner at any time to help decrease the workload and liability and to bring in more capital. Forming a partnership is simple and relatively inexpensive. The partners are not personally liable for business debts if the partnership is registered with the state. Partnerships are not taxed.
Forming a partnership is simple and relatively inexpensive. Partnerships are not taxed.
Which of the following are qualities of a non-profit corporation? Choose 2 answers. Its goal is to not earn a profit. Its goal is to earn a profit. It provides minimal dividends to company shareholders. It does not provide dividends to shareholders.
Its goal is to earn a profit. It does not provide dividends to shareholders.
Which statement is true about creating a sole proprietorship? There is a waiting period of 30 days between opening the business and the time a sole proprietorship becomes official. The owner of a sole proprietorship must file an official record of the business name with the secretary of state's office. No documentation is required to create a sole proprietorship. The members of a sole proprietorship must write and sign an operating agreement.
No documentation is required to create a sole proprietorship.
Which of the following is required to create a sole proprietorship? Filing Articles of Organization with the secretary of state Filing Articles of Incorporation with the secretary of state An intention between two or more people to run a business Nothing
Nothing
The Rustic Fig, an upscale restaurant, is going out of business. Penelope's Eatery agrees to buy all of Rustic Fig's assets for $100,000. After the transaction is completed, Rustic Fig still has $200,000 in outstanding debt. Who is responsible for Rustic Fig's debt? Rustic Fig is responsible because this is a merger. Penelope's Eatery is responsible because this is a merger. Rustic Fig is responsible because this is a purchase of assets. Penelope's Eatery is responsible because this is a purchase of assets.
Rustic Fig is responsible because this is a purchase of assets.
The formation of a partnership without a partnership agreement requires which of the following? Choose 2 answers. The intent to form a partnership Five or more partners Sharing of management duties Sharing of profits and losses
Sharing of management duties Sharing of profits and losses
Tasmo Inc. and Velmo Inc. are both corporations that manufacture metal snaps, so they are competitors. Velmo has a huge part of the market share but also has huge outstanding debt. Tasmo is a newcomer to the market with minimal outstanding debt. Tasmo and Velmo decide to merge their companies to improve their market share and financial picture. After the merger is completed, Tasmo is the company that remains. Who will be responsible for Velmo's outstanding debt? Tasmo Velmo must satisfy all outstanding debt before the merger can be completed. Velmo Velmo's debt will go away when the parties merge because the original corporation no longer exists.
Tasmo
At the first meeting of corporate shareholders, what business is normally conducted? Choose 2 answers. The filing of the articles of incorporation The election of the board of directors The adoption of corporate bylaws Voting on the business name
The election of the board of directors The adoption of corporate bylaws
Which of the following is a necessary element of the business judgment rule? Choose 2 answer choices. The person acted in good faith. The person acted with extraordinary skill and care. The person acted with the care of an ordinarily prudent person. The outcome of the action did not cause financial harm to the corporation.
The person acted in good faith. The person acted with the care of an ordinarily prudent person.
Where should Articles of Incorporation be filed? Articles of Incorporation are not filed. With the county recorder's office With the state With the federal government
With the state
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 distant corporation. a domestic corporation. an alien corporation.
a foreign corporation.
A written agreement outlining the roles of partners, their rights, and their duties are called: Operating agreements. Articles of Incorporation. a partnership agreement. Articles of Organization.
a partnership agreement.
To meet the standard for the duty of care, a person must: act in good faith and with the judgment of an ordinarily prudent person. be faithful to the corporation. act in good faith and without a mistake. act in good faith and with the judgment of a highly skilled person.
act in good faith and with the judgment of an ordinarily prudent person.
The Board of Directors may conduct business: (Choose 2 answer choices) privately and outside of meetings called by the corporation. at regular meetings. at special meetings. at any time.
at regular meetings. at special meetings.
In a manager-managed LLC, the designated manager may: (Choose 2 answers) only be from outside the members of the company. be from within the members of the company. only be from within members of the company. be from outside the members of the company.
be from within the members of the company. be from outside the members of the company.
The process by which two or more corporations combine in such a way that none of the original corporations continue to exist and a new corporation is formed from the combination is called a: merger. parent-subsidiary takeover. consolidation. joint venture.
consolidation.
If an action is permitted expressly by the corporate bylaws, but is prohibited by state law, a corporation: must challenge the state law. does not have the power to act. has the power to act. must amend their articles of
does not have the power to act.
A shareholder has the right to inspect the corporate books, if done: in good faith and for a proper purpose. to provide a competitor with an advantage. to determine voting alliances. for any purpose.
in good faith and for a proper purpose.
Three motivations behind a hostile takeover include: (Select 3 answers) increasing profits by having the target corporation buy back its stock at a premium increasing the leverage position of the acquiring company reducing competition by dismantling the target corporation acquiring a particular asset of the target corporation.
increasing profits by having the target corporation buy back its stock at a premium reducing competition by dismantling the target corporation acquiring a particular asset of the target corporation.
Most limited liability company (LLC) statutes provide that unless the articles of organization specify otherwise, an LLC is assumed to be managed by: its members. a board of nine managers. one manager. a board of six members and six non-member managers.
its members.
Which of the following is a duty of both corporate directors and corporate officers? limiting political endorsements to only candidates that the corporation supports working at least forty hours per week for the corporation making a full disclosure of potential conflicts of interest purchasing stock in the company
making a full disclosure of potential conflicts of interest
The "poison pill" takeover defense, prevents a hostile takeover by: closing the business. making the takeover prohibitively expensive after the target corporation provides stockholders the right to purchase additional shares at low prices. the target corporation attempting its own takeover of the acquiring corporation. soliciting a third-party corporation to make a better offer.
making the takeover prohibitively expensive after the target corporation provides stockholders the right to purchase additional shares at low prices
The process by which two or more corporations combine in such a way that only one of the original corporations continues to exist after the combination is called a: poison pill. greenmail takeover. merger. share exchange.
merger
What type of corporation is formed for the purpose of doing a public service instead of making money? public nonprofit publicly held privately held
nonprofit
A foreign corporation is: one that was incorporated in two or more different states. one that was incorporated in a different state. one that was incorporated outside of the United States. one that it privately held.
one that was incorporated in a different state.
The result of a merger between two corporations is that: both corporations continue to exist, but one owns the assets of another. both corporations continue to exist, but one is the parent and one is the subsidiary. only one corporation continues to exist. neither corporation continues to
only one corporation continues to exist.
Mason is the CEO and sole shareholder of Mason Products, Inc., a corporation that manufactures and sells bird calls. Mason regularly uses the corporate credit card to purchase personal items, including furniture and clothes, and even makes monthly payments on his Corvette using the corporate credit card. When Mason Products becomes insolvent, its creditors file suit against Mason personally to seek payment for corporate debts. In this situation, the court is likely to: pierce the corporate veil and hold Mason personally responsible. not hold Mason personally responsible, because shareholders are not personally responsible for corporate debt. not hold Mason responsible because as CEO, he is protected by the business judgment rule. hold Mason responsible under the theory of ultra vires.
pierce the corporate veil and hold Mason personally responsible.
The simplest form of business to establish is a: corporation. limited liability company. sole proprietorship. partnership.
sole proprietorship.
The power to merge or consolidate companies is controlled by: local ordinances. no law. statutory law. administrative regulations.
statutory law
The Simply Shoes and Socks Company wants to expand its market overseas. To do this, the company must sell off a less profitable operation. Whose responsibility is it to make the final decision about whether to sell off the less profitable operation? the venture capitalists the board of directors the corporate officers the shareholders
the board of directors
Lillian applies for a job as the chief financial officer (CFO) of Delco Corporation. Lillian is excited about the opportunity and feels that she has a pretty good chance of getting the position. Just to make sure, Lillian decides to explore the backgrounds of the decision-makers at Delco. If Lillian knows their interests, she thinks that might increase her chances of making a good impression in the final interview. The decision-makers who will decide whether or not Lillian gets the CFO position at Delco Corporation include: the chief executive officer, secretary, and treasurer of Delco Corporation. the board of directors. the shareholders of Delco Corporation. the chief executive officer only.
the board of directors.
After researching the acquisition of a plant in another state, the directors of the PQRS Corporation voted to issue additional shares of stock to finance the expansion. To stop the expansion, some unhappy shareholders filed a lawsuit on behalf of the corporation alleging the directors have made a bad business decision. Which of the following would a court apply to make a decision? the Sarbanes-Oxley rule the business judgment rule the ultra vires doctrine the derivative rule
the business judgment rule
What principle protects corporate directors and officers from liability for bad decisions if they are made as honest mistakes rather than in negligence? reasonable culpability no-fault liability the business judgment rule duty of judgment
the business judgment rule
What documents spell out the powers of a corporation? Choose 2 answers. certificate of corporate power the bylaws de facto documentation the charter (also called the articles of incorporation)
the bylaws the charter (also called the articles of incorporation)
Savannah is shopping at King Toys Inc. when a large box of toys falls from a top shelf and strikes her, causing severe injuries. Savannah sues King Toys Inc. and each of its shareholders individually for her injuries. If Savannah's lawsuit is successful, she will be able to recover from: the corporate entity only. the corporate entity and the individual shareholders. the shareholders only. neither the corporate entity nor the shareholders.
the corporate entity only.
Ellie, Josie, and Dylan are partners in a car dealership. Ellie gives notice to Josie and Dylan that she wants to withdraw from the partnership, and Josie and Dylan decide to continue the partnership without her. Shortly after Ellie leaves the partnership, she has lunch with an old friend, Justin. Justin has been looking for a new car and asks about the price of a particular car he saw on the website of the dealership, because he does not know that Ellie has left the partnership. Instead of telling Justin that she has left the partnership, Ellie quotes Dylan a price for the car, and Dylan accepts. When Dylan goes to the car dealership to complete the deal: the dealership must honor the deal unless it has provided Dylan notice of Ellie's dissociation. the dealership is not required to honor the deal whether or not it has provided Dylan notice of Ellie's dissociation. the dealership must honor the deal and reinstate Ellie as a partner. the dealership is not required to honor the deal because Ellie is no longer a partner.
the dealership must honor the deal unless it has provided Dylan notice of Ellie's dissociation.
A sole proprietorship differs from a limited liability company (LLC) in: ability to earn a profit. the documentation required for formation. the minimum number of owners. how stock is sold.
the documentation required for formation.
Who is liable for contracts entered into on behalf of the corporation before the corporation is formed? the promoter the corporation the Chief Executive Officer no one, because that cannot happen
the promoter
A partnership differs from a joint venture in: the scope of work for which the business is created. how the members share profits and losses. management rights. the minimum number of members.
the scope of work for which the business is created.
A corporate officer, as an agent of the corporation, has a duty of loyalty to make decisions that will benefit: (Choose 2 answers.) a charitable organization. the stockholders. a subsidiary corporation. the corporation itself.
the stockholders. the corporation itself.
An operating agreement for a limited liability company: may not specify how profits are divided. is required for the operation of a limited liability company. typically includes provisions about choosing the LLC's management. must be in writing and signed by all the officers of the company.
typically includes provisions about choosing the LLC's management.
The board of directors manages: shareholder proxies. employees' daily tasks. the business and affairs of the corporation. the day-to-day activities of a corporation.
the business and affairs of the corporation.
The first step in terminating a corporation is: the officers winding up business. paying all debts and outstanding taxes. closing all bank accounts. the board of directors adopting a resolution to dissolve the corporation.
the board of directors adopting a resolution to dissolve the corporation.
During a hostile takeover attempt the board of directors of the target corporation blocked the attempt, however, shareholders who would have received a premium price for their stock are angry and sue. The courts will use: the rule of reason to determine if the takeover made more financial sense to a greater number of people. the business judgement rule to determine if the directors acted reasonably. intermediate scrutiny to determine if it was the best course of action. the rational basis test to determine if the block was the best course of action.
the business judgement rule to determine if the directors acted reasonably.
Which of the following provisions are typically in a charter for a corporation? Choose 2 answers. the name and address of the corporation's agent the advertising plan for the corporation the trade secrets of the corporation the intended business purpose of the corporation
the name and address of the corporation's agent the intended business purpose of the corporation
Which of the following provisions are typically in an operating agreement for a limited liability company (LLC)? Choose 2 answers. a record of the company's assets and debts whether the dissociation of a member, such as by death or departure, will trigger dissolution of the LLC the advertising plan for the company how membership interests may be transferred
whether the dissociation of a member, such as by death or departure, will trigger dissolution of the LLC how membership interests may be transferred
Which of the following should be approved by shareholders? Choose 2 answers. An acquisition of the company by another company A sale of old computers that the company no longer uses A dissolution of the corporation A change in employee compensation
An acquisition of the company by another company A dissolution of the corporation
Which of the following is a disadvantage of operating as a partnership? A partnership may be formed for only one year at a time and the registration must be renewed annually. Partnerships are taxed at the same rate as corporations. A partnership may not own real or personal property. Partners may suffer financial loss if the partnership is not profitable.
Partners may suffer financial loss if the partnership is not profitable.
Which type of corporation is taxed like a partnership, with shareholders paying personal income tax on business income? S corporation C corporation public corporation alien corporation
S corp
What happens when a limited partnership fails to substantially comply with all the requirements of the state statute regarding limited partnerships? The limited partnership becomes a corporation. The limited partnership becomes a sole proprietorship. The limited partnership becomes an LLC. The limited partnership may lose its limited partnership status.
The limited partnership may lose its limited partnership status.
How does the governance of a closely held corporation compare to the statutory model of corporate governance? They are very different, with shareholders having more influence in a closely held corporation than in the statutory model. They are very similar, with directors having the most influence in both models. 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.
They are very different, with shareholders having more influence in a closely held corporation than in the statutory model.
You have a brilliant idea for a new company. For children's birthday parties, you plan to provide a traveling children's show, complete with petting zoo and clowns, and take it wherever the party occurs. Two friends agree to help you with your venture, so you decide you probably need to incorporate, just so you look "official." Do you think there might be any drawbacks to incorporating? While there may be some drawbacks to incorporating, you are more interested in the tax benefits you will receive from incorporating. No, there are no drawbacks to incorporating. Yes, you may have to pay more taxes. Yes, you may be liable for any bad acts committed by your friends.
Yes, you may have to pay more taxes.
Company XYZ has 50,000 shares of outstanding stock and 50,0000 shares in reserve. The share price of the stock has been steady at $2.00 per share, but upon the threat of a hostile takeover Company XYZ offers to buy back all outstanding shares at $4.00 per share. This is known as: asset lockup. the golden parachute. the white knight. greenmail.
green mail
Any partner: may encumber the property of the partnership to satisfy personal debt. is entitled to compensation for their time, skill, and effort. may create a business in direct competition with the partnership. may act as an agent who binds the partnership.
may act as an agent who binds the partnership.
Summation Management Inc. is the parent company of several different hospitality management corporations. Sleep Inn Inc. seeks to become one of Summation's subsidiaries. Summation and Sleep Inn enter an agreement whereby Sleep Inn will provide to Summation all its stock. For each five shares of Sleep Inn stock that Sleep Inn provides to Summation, Summation will provide to Sleep Inn one share of Summation stock. After the agreement, both Sleep Inn and Summation will remain as separate corporations. Sleep Inn and Summation have formed a: consolidation. short sale. share exchange. merger.
share exchange
A member-managed LLC means: partners vote on financial decisions. all members participate, and decisions are made by majority vote. shareholders vote on financial decisions. the members elect a board of directors who make business decisions.
all members participate, and decisions are made by majority vote.
Fatima is on the board of directors of Tyson Inc. Fatima never attends board meetings and never inspects the books of the company. The board hires Alexis as the chief executive officer (CEO) of Tyson. For the next two years, while Alexis is serving as CEO, Alexis delegates important tasks to employees who are not trained for the tasks, fails to monitor the corporate bank accounts, and approves several high-dollar contracts without making reasonable inquiries about them. Alexis also enters into two contracts on behalf of the corporation with other companies in which she owns an interest. If Tyson suffers a loss because of Alexis's actions: neither Alexis nor Fatima can be held liable. only Alexis can be held liable, because all these decisions are her responsibility. both Alexis and Fatima can be held liable. only Fatima can be held liable, because Alexis is protected by the business judgment rule.
both Alexis and Fatima can be held liable.
Ellie, Josie, and Dylan are partners in a car dealership. Ellie gives notice to Josie and Dylan that she wants to withdraw from the business. As a result of Ellie leaving the partnership, Josie and Dylan: can only dissolve the partnership if the partnership agreement states that it must dissolve when a partner dissociates. can either continue the partnership without Ellie or agree to dissolve the partnership. must continue the partnership unless they get a court order to dissolve the partnership. must dissolve the partnership.
can either continue the partnership without Ellie or agree to dissolve the partnership.
Which of the following must approve a merger: (Select all that apply) the board of directors of the acquiring company. the shareholders of the acquiring company. the board of directors of the targeted company. the shareholders of the targeted company.
the board of directors of the targeted company. the shareholders of the targeted company.
When establishing a takeover defense, which of the following must be the board's primary concern? The wellbeing of the shareholders Their individual interests The wellbeing of the corporation The wellbeing of the corporation's employees.
The wellbeing of the corporation
Which of the following is a requirement for the initial formation of a corporation? an initial stock offering a charter a board of directors a minute book
a charter
Julian is a shareholder in Big Bang Corporation. Big Bang has had an excellent year and declares $5,000 in dividends to its shareholders. Julian is elated, because he can really use that $5,000. When Julian receives his dividend check, it will be in the amount of: $5,000 minus taxes, because even though the corporation pays taxes on its profits, shareholders must also pay taxes on dividends. $5,000 minus taxes, because the corporation pays no taxes on its profits; all taxes are paid by the shareholders when dividends are awarded. $5,000, because the corporation pays taxes on profits, and, therefore, shareholders do not have to pay taxes on dividends. $5,000, because corporations pay an annual tax to do business in the state, and, therefore, shareholders are not taxed on their dividends.
$5,000 minus taxes, because even though the corporation pays taxes on its profits, shareholders must also pay taxes on dividends.
In which of the following would the business judgment rule not help a manager escape liability? Choose 2 answer choices. When they committed an illegal act If they conducted a reasonable inquiry, but the activity still resulted in a poor outcome When they did not act in the best interests of the corporation When they acted as an ordinarily prudent person in good faith would act
When they committed an illegal act When they did not act in the best interests of the corporation
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. authorizing corporate policy decisions such as pursuing new product lines. making personnel decisions on the executive level and setting compensation for officers.
making financial decisions about when to declare dividends. authorizing corporate policy decisions such as pursuing new product lines. making personnel decisions on the executive level and setting compensation for officers.
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 does not have sufficient capital to operate and meet its debts. 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. Personal and corporate money is mixed together in one account.
Your late aunt Gertrude left you a couple of shares of Microsoft in her will, which she bought for you on the day you were born. Recently, there have been rumors of Microsoft acquiring a well-known social media app which you frequently use. You think this is a great idea and would like to have your (very small) voice be heard as a shareholder of Microsoft. Must Microsoft get the approval of you, and other shareholders, before acquiring the other company? No, if the transaction is a consolidation. No, if the transaction is a merger. Yes, if the transaction is a purchase of assets. No, if the transaction is a purchase of assets.
No, if the transaction is a purchase of assets
What is the role of directors in a corporation? Choose 2 answers. The board of directors selects and removes the corporate officers. The directors are trustees, holding title to the corporate property for the benefit of the corporation. Directors make policy decisions necessary for the management of the company. Each individual director has the authority to act as an agent for the corporation to make contracts.
The board of directors selects and removes the corporate officers. Directors make policy decisions necessary for the management of the company.
Ben and Jerry are partners in an ice cream shop. They both work in the ice cream shop and share profits and expenses equally. Jerry thinks that expanding their ice cream shop to include a soda fountain would attract more customers. Without getting Ben's approval on the deal, Jerry signs a contract with the construction company to begin building the soda fountain. When Ben finds out, he is furious and says that he will not be responsible for payment under the contract. The construction company can enforce the contract against: neither Ben nor Jerry. Jerry only. both Ben and Jerry. Ben only.
both Ben and Jerry.
Lettie Lotto wants to negotiate a fleet lease agreement between her own business, Lettie's Leased Autos, and the corporation where she is a director, for ten cars to be used by corporate employees. To handle this conflict of interest, Lettie should do which of the following? Choose 3 answers. ensure transparency in the negotiation of the lease agreement provide a large discount because of the conflict of interest refrain from voting on the approval of the lease agreement fully disclose her interest in the transaction
ensure transparency in the negotiation of the lease agreement refrain from voting on the approval of the lease agreement fully disclose her interest in the transaction
Bly and Ahmik are partners in a sandwich shop. They have been struggling for the last couple of years and, finally, decide to close the sandwich shop and dissolve the partnership. During the winding-up process, Ahmik spends most of his time pursuing his next venture, so Bly is handling most of the work involved in collecting and preserving partnership assets and paying the debts of the partnership. If Bly requests payment for his services in winding up the partnership: he is not entitled to payment for those services, because it is part of his duty as a partner. he is entitled to payment for those services only if the partnership agreement provides for it. he is entitled to payment for those services. he is not entitled to payment for those services, because he receives a share in the partnership profits.
he is entitled to payment for those services.
Jerry Hall and Lawrence Vaught practice law in the same building. They share equally in the overhead expenses, such as rent and utilities, required to keep the business running. Both Jerry and Lawrence handle their own cases, consult and accept their own clients, and purchase their own advertising. Jerry and Lawrence do occasionally handle a case together, and they have stationery that says "Hall and Vaught" on the letterhead. They each have their own stationery as well. Jerry and Lawrence keep their finances separate, except when they handle a case together; then, they split the proceeds equally. When a client of Jerry's becomes dissatisfied and sues Jerry for malpractice, she sues Lawrence as well. In deciding whether or not a partnership exists here, the court will look at: whether Jerry and Lawrence share profits and losses, whether they own the business jointly, and whether they have an equal right to be involved in the management of the business. whether Jerry and Lawrence have signed a partnership agreement. whether Jerry and Lawrence share profits and losses in the business. whether Jerry and Lawrence list themselves as partners on their letterhead.
whether Jerry and Lawrence share profits and losses, whether they own the business jointly, and whether they have an equal right to be involved in the management of the business.
You have been approached by a headhunter who tells you of a great new job opportunity that seems to fit your business management education - CEO of a newly-formed corporation. You are interested in the job because you have a lot of ideas about corporate management that you would like to try out, but a little concerned about your liability in the position. You know there is a board of directors that the CEO must report to. What if one of your business decisions is not successful and the corporation loses money as a result? If you make a bad business decision as CEO of the corporation: you will not be held liable as long as you exercised due care and acted within your managerial authority. you can be held liable to the value of your salary; any losses that exceed that amount must be absorbed by the corporation. you will not be held liable unless you acted with criminal intent. you can be held liable if the corporation loses money as a direct result of your decision.
you will not be held liable as long as you exercised due care and acted within your managerial authority.
Mazie is on the board of directors for Belltone Corporation, a corporation that manufactures hearing aids. Mazie has not attended a board meeting in the last two years and has not participated in any board activities. Mazie refuses, however, to give up her position on the board. Mazie can be removed from the board by: a majority vote of the shareholders. a vote of two-thirds of the shareholders. a vote of two-thirds of the directors on the board. a majority vote of the board of directors.
a majority vote of the shareholders.
An involuntary dissolution may be brought about by: a unanimous vote of the shareholders to dissolve. an agreement between the board of directors and shareholder to dissolve. a court order as the result of fraudulent acts by management. the expiration of a time period named in the articles of incorporation.
a court order as the result of fraudulent acts by management.
A hostile takeover defense known as asset lockup or crown jewel, occurs when: the acquiring corporation only acquires a portion of the target company. the target corporation sells off the asset(s) most attractive to the acquiring corporation. the target corporation solicits a third corporation to make a better offer. the target corporation terminates all their current managers to prevent approval of a takeover.
the target corporation sells off the asset(s) most attractive to the acquiring corporation.
You and your buddy want to start a new landscaping business. You equally invest in the equipment you need to get started. You will both be equally responsible for the work and will share the profits equally. After investigating the possible forms of business entities available, you decide a partnership would be the best for your landscaping business. What do you think you might need to do to form a partnership? You and your buddy must file a certificate of organization with the government. You and your buddy just need to agree to be partners. You and your buddy must register your landscaping business with the county clerk. You and your buddy must sign a written partnership agreement.
You and your buddy just need to agree to be partners.
Which of the following actions show a failure to uphold the duty of loyalty expected of corporate directors? Choose 2 answers. running a small side business that competes with the corporation serving on a board of directors for one of the corporations' suppliers using information that is not public knowledge to make a profit on purchases or sales of the company's stock 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
For which of the following might directors or officers be held liable for damages to the Uber Rich Pharmaceuticals Corporation? Choose 3 answers. Directors decided that developing a system of controls for financial accountability was too expensive and refused to do so. The corporation was fined heavily by the federal government for its failure to comply with Sarbanes-Oxley. Directors reviewed a research report and financial proposals for a new product but mistakenly overlooked a high-cost ingredient for the new drug product that cost the corporation millions of dollars. Officers intentionally withheld from directors a financial statement that would have alerted directors to a scheme to skim funds off the top of profits from a new product. Directors ignored a research report from the officers that a proposed new product would be detrimental to customers' health, outweighing any benefits, and went ahead with production.
Directors decided that developing a system of controls for financial accountability was too expensive and refused to do so. The corporation was fined heavily by the federal government for its failure to comply with Sarbanes-Oxley. Officers intentionally withheld from directors a financial statement that would have alerted directors to a scheme to skim funds off the top of profits from a new product. Directors ignored a research report from the officers that a proposed new product would be detrimental to customers' health, outweighing any benefits, and went ahead with production.
During the winding up phase, which of the following is paid first? creditors of the corporation corporate officers preferred shareholders common stock shareholder
creditors of the corporation
After twenty-five years in business, Birdsong Enterprises Inc. has decided to stop manufacturing bird calls. The shareholders unanimously vote to terminate the company and the board of directors begins the winding up process. They notify all Birdsong's existing customers and take all actions necessary to bring the business to an end. As part of the winding up process Birdsong must: file articles of dissolution with the state and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be received. notify its creditors of the dissolution and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be received. file articles of dissolution with the state, notify its creditors of the dissolution, and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be received. file articles of dissolution with the state and notify its creditors of the dissolution.
file articles of dissolution with the state, notify its creditors of the dissolution, and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be received.
Xavier and Ciara form a corporation to provide cleaning services to local businesses. After two years of trying to make a go of the business, the profits they had hoped for are just not there. Xavier and Ciara decide to dissolve the corporation and go their separate ways. To terminate the corporate entity, Xavier and Ciara must: file articles of dissolution with the state, notify the creditors of the corporation of the dissolution, and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be received. file articles of dissolution with the state. file articles of dissolution with the state and notify the creditors of the corporation of the dissolution within 120 days of filing the articles of dissolution. file articles of dissolution with the state and notify the creditors of the corporation of the dissolution within 30 days of filing the articles of dissolution.
file articles of dissolution with the state, notify the creditors of the corporation of the dissolution, and establish a date (at least 120 days after the date of dissolution) by which all claims against the corporation must be receive
Kelly lives in Arkansas and works in the data division of Acxiom Corporation. Acxiom has its headquarters in Conway, Arkansas. Acxiom is incorporated in Delaware, however, because of the corporate-friendly laws in that state. Kelly works in a(n): domestic corporation, because Acxiom's headquarters is in the same state where Kelly works. foreign corporation because Acxiom is incorporated in a different state than the division where Kelly works. alien corporation because Acxiom is incorporated in a different state than the division where Kelly works. close corporation because Kelly works in a division of Acxiom located close to where she lives.
foreign corporation because Acxiom is incorporated in a different state than the division where Kelly works.
Genna and four others are establishing a business to create monogrammed items of personal clothing to sell to the general public. Genna is concerned about entering into business with others and possibly being liable for their actions, so she convinces the others that they should incorporate. After doing some basic research on how to incorporate a business, Genna starts preparing the articles of incorporation. At a minimum, Genna must make sure that the articles of incorporation include: the name of the corporation, the number of shares of stock the corporation is authorized to issue, and the name and address of each incorporator. the name of the corporation and the name and address of each incorporator. the name of the corporation, the number of shares of stock the corporation is authorized to issue, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator. the name of the corporation, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator.
the name of the corporation, the number of shares of stock the corporation is authorized to issue, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator.
Kaleb is the CEO of Sports City, a sporting goods store. Kaleb wants to increase the sales of Sports City. Kaleb researches the market and discovers that boat sales are soaring, so Kaleb decides to add a line of boats to the inventory of Sports City. Kaleb finds what he believes is a great deal on fishing boats with Fisherman's Boat Supply and enters into a contract for $90,000 worth of fishing boats. During the first year after the fishing boats are delivered to Sports City, only one boat sells. Sports City suffers an $85,000 loss on the deal. If the board of directors tries to hold Kaleb personally liable for the loss: they will not be successful, because as CEO, Kaleb has the ultimate authority to make any decision he chooses about the company and cannot be held responsible even for a careless decision. they will be successful, because Kaleb violated his duty of care to the company. they will be successful, because Kaleb violated his duty of loyalty to the company. they will not be successful, because Kaleb will be protected by the business judgment rule.
they will not be successful, because Kaleb will be protected by the business judgment rule.
Which of the following defines the "implied powers" of a corporation? The right to perform all acts reasonably necessary to accomplish a corporate purpose The power granted to a corporation by the corporate bylaws The power granted to a corporation by the U.S. Constitution Any power arising out of a formally adopted resolution of the corporation
The right to perform all acts reasonably necessary to accomplish a corporate purpose