Ch 9A
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
