chapter 39

. Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation—Journeys Inc. To avoid income taxes at the corporate level, they should form a. an alien corporation. b. a close corporation. c. an S corporation. d. a private corporation. ANSWER: c

c

Allen wants Wilderness Outfitters to join with him to form and do business as Canyon River Rafting Corporation. A corporation can be owned by a. natural persons only. b. other businesses only. c. other businesses or natural persons. d. none of the choices. ANSWER: c

c

Dennis and Eve want to form and do business as a corporation—Farm-2-Fork Inc. A corporation is a. a natural being. b. a tangible thing. c. an artificial legal person. d. a non-entity. ANSWER: c

c

Hollywood Lights, Inc. substantially complies with all conditions precedent to incorporation. Hollywood is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. a benefit corporation. ANSWER: c

c

. Rita and Susan want to form and do business as Trips & Travel, Inc. They will serve as the firm's directors and officers, and will initially hold all of the stock in the company. A corporation is owned by a. the board of directors. b. the officers. c. the employees. d. the shareholders. ANSWER: d

d

. Wiley incorporates his business as Wiley's Wire Inc. in Arizona. He and his group of shareholders intend to make a profit from their sales of fencing wire. Wiley's is a. a nonprofit corporation. b. not a corporation. c. a benefit corporation. d. a private corporation. ANSWER: d

d

. Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is a. a domestic corporation. b. a foreign corporation. c. an alien corporation. d. a non-entity. ANSWER: a

a

Bay City Merchants Corporation has six shareholders, four of whom are members of the same family. All of Bay City's shareholders agree in writing to operate without shareholders' meetings. Under the Revised Model Business Corporation Act, this most likely warrants a. no penalties or sanctions. b. the imposition of a fine on Bay City. c. the imprisonment of Bay City's shareholders. d. the piercing of Bay City's corporate veil. ANSWER: a

a

. Blair and Chanel are holders of common stock in Discount Retail Stores, Inc. Like other holders of common stock, they have a residual position in the overall financial structure of Discount Retail, because they a. are guaranteed to receive more than the amount of their investment. b. are the last to receive returns for their investment. c. have priority to the firm's assets if it becomes insolvent. d. reside in the state of the firm's incorporation. ANSWER: b

b

Burgers & Brews, Inc., files its articles of incorporation with the appropriate government agency. Not likely to appear in the articles is the name of a. each incorporator. b. each shareholder. c. the corporation. d. a registered agent. ANSWER: b

b

Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing business in the state of New York. In New York, Dollars & Sense is properly referred to as a. a domestic corporation. b. a foreign corporation. c. an alien corporation. d. a public corporation. ANSWER: b

b

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. a benefit corporation. ANSWER: a

a

Ida and Jay are the shareholders and the directors of Keystone Property Management Inc. Lily and Mike are Keystone officers. The responsibility for the overall management of this firm rests with a. Ida and Jay, as the directors. b. Lily and Mike, as the officers. c. Ida and Jay, as the shareholders. d. all of the parties. ANSWER: a

a

Pro Audio, Inc., would like to change its corporate status to that of an S corporation. To qualify, Pro Audio must a. be a domestic corporation. b. have more than one hundred shareholders. c. be a benefit corporation. d. all of the choices. ANSWER: a

a

Sean is the incorporator of Twisty's Pretzels Corporation. Ross is a shareholder, Phyllis is a director, and Velma is an officer. The day-to-day operations of Twisty's are overseen by a. Velma. b. Ross. c. Sean. d. Phyllis. ANSWER: a

a

Integrated Devices, Inc., is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Integrated is a. an S corporation. b. a close corporation. c. a nonprofit corporation. d. none of the choices. ANSWER: b

b

Interstate Paving, Inc., issues bonds. Bonds a. are issued by businesses only. b. are referred to as fixed-income securities. c. feature voting rights. d. require periodic interest payments from their owners. ANSWER: b

b

Sierra is a holder of preferred stock in Rio Grande Irrigation, Inc. Sierra has priority over holders of Rio common stock as to a. nothing. b. payments of dividends. c. the date on which Rio must repurchase the shares. d. upward changes in the market price of the shares. ANSWER: b

b

The abbreviation "P.A." in the name "Conrad & Drake, Accountants, P.A." means that this organization is a. a private association. b. a professional association. c. a public association. d. a publicly administered corporation. ANSWER: b

b

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is a. a publicly held corporation. b. a public corporation. c. a private corporation. d. not a corporation. ANSWER: b

b

Wings2Go Corporation fails to hold an organizational meeting. In this circumstance, Wings2Go is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. ultra vires. ANSWER: b

b

. A firm named Biometric Research makes an attempt to incorporate for a purpose other than making a profit. Biometric is a. a foreign corporation. b. an alien corporation. c. a nonprofit corporation. d. not a corporation. ANSWER: c

c

. Finn and Glenda want to form and do business as Hobby Crafts Corporation. A corporation is a. a natural person. b. a tangible thing. c. an artificial being. d. a visible contemplation. ANSWER: c

c

. Like the bylaws of other corporations, the bylaws of Rocks, Paper & Scissors, Inc., a. establish the operating name of the corporation. b. establish the value and classes of corporate stock. c. were adopted at its first organizational meeting. d. were submitted for approval to the public official in charge. ANSWER: c

c

Equestrian Stables Corporation's articles list an incorrect address for its incorporator. Under this circumstance, Equestrian Stables is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. ultra vires. ANSWER: c

c

Flo and Glen form Health Food Inc. to coordinate the purchase, sale, and delivery of food products from organic farms to hospitals and other institutions. The stated purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is a. a nonprofit corporation. b. not a corporation. c. a benefit corporation. d. a private corporation. ANSWER: c

c

Rob owns Solar Panels Corporation. He uses Solarl's funds to pay his personal expenses, creates Thermal Power Inc. to engage in the same business as Solar, transfers Solar's assets to Thermal, and petitions Solar into bankruptcy. This most likely warrants a. a bonus to Rob for financial maneuvers. b. a discharge for Solar in bankruptcy. c. a pierce of the corporate veil. d. a review of Thermal's articles of incorporation. ANSWER: c

c

. Ben incorporates his app business as Clickology, Inc. Under most state corporation statutes, Clickology can have a. only a finite, yet-to-be-determined existence. b. only a one-year, nonrenewable existence. c. only a one-year, renewable existence. d. perpetual existence. ANSWER: d

d

Boutique Bodega Corporation would like to change its corporate status to that of an S corporation. To qualify, the shareholders must not be a. corporations. b. estates. c. individuals. d. partnerships. ANSWER: d

d

Jen and Kay would like to form Lunch Garden, Inc., to enter the food vending business. Most likely, the articles of incorporation for the firm will not include a. the corporate name. b. the name and address of a registered agent. c. the number of shares that the corporation is authorized to issue. d. the minutes of the first organizational meeting. ANSWER: d

d

Ned and Olsen want to form and do business as a corporation—Pastries & Pies Inc. Its existence depends generally on a. city or county corporate codes. b. the Entrepreneur's Corporate Handbook. c. the federal Administrative Procedure Act. d. state law. ANSWER: d

d

Owen is a registered agent for Pods & Phones, Inc., which incorporated in California. As a registered agent, Owen a. agreed to sell stock in the firm before it existed. b. applied to California on the firm's behalf to obtain its corporate charter. c. represents the firm as a marketing agent. d. receives legal documents on behalf of the firm. ANSWER: d

d

Tech Talent, Inc., is a corporation. Techno Talent's implied powers enable it to a. none of the choices. b. depart significantly from traditional corporate formalities. c. bind the corporation to an action that will greatly affect its purpose. d. borrow funds and lend funds. ANSWER: d

d

The shares of Home Mortgage Corporation are publicly traded in securities markets. Home Mortgage Corporation is a. a close corporation. b. a privately held corporation. c. a public corporation. d. a publicly held corporation. ANSWER: d

d

Vince buys 500 shares of common stock in Water Services, Inc. As a shareholder of record, Vince owns a proportionate interest with regard to Water's a. net assets. b. control. c. earnings. d. all of the choices. ANSWER: d

d