ACCT 324 Exam 2

Which statement best describes a fiduciary?

Fiduciaries have a duty to act primarily for another person's benefit.

If Corporation A wants to takeover Corporation B but Corporation B objects, the takeover is referred to as _____.

Hostile takeover

When a partner enters into agreements necessary to carry on the partnership business, that partner has exercised his or her _____.

Implied authority

Which of the following types of termination occurs due to operation of law?

Insanity

In a consolidation, which corporation(s) continue(s) to exist legally?

Neither of the original corporations

Which category of preferred stock entitles its owners to both preferred stock dividends and, after the corporation has paid common stock dividends, additional dividends?

Participating preferred stock

When a partner commits a tort or breach of trust, all partners who are jointly and severally liable may be responsible for:

100% of the judgement, regardless of percentage of liability.

If it becomes impractical to carry out the business of the partnership (i.e., continuation of the partnership will only result in lost profits), a partner may seek to dissolve the partnership by which of the following methods?

Act of the court

What kind of notice must a third party who had business interactions with the agent be given?

Actual notice

Which of the following is NOT a type of lawsuit that a shareholder may bring against the corporation?

Breach of duty suit

If an agency misrepresents themselves, a third party can do which of the following?

Cancel the contract and be compensated for any money lost

______ play the role of decision makers.

Directors

Which power of attorney is intended to continue beyond the principal's incapacitation?

Durable power of attorney

Agency laws are relevant to three types of business relationships. Which of the following is NOT one of those relationships?

Employee-Independent contractor

Which of the following forms of authority do NOT support a basis for an agency relationship?

Evidentiary

According to the Uniform Partnership Act (UPA), the distribution of liquidated assets must proceed in which order?

Payments to creditors of the partnership, payments of refunds or repayment of loans to partners for loans made to the partnership, payments to partners of the capital they invested, and payments of profits distributed on the basis of the partnership agreement

A limited partner may NOT do which of the following?

Recover their investment before outside creditors upon termination of the limited partnership

Directors have all but which of the following rights?

Right to purchase unlimited stock

Which of the following statements best describes a secured bond?

Secured bonds are those that have specific corporate assets to support the corporation's obligation to repay.

If a director or officer makes a decision that benefits other companies with which they have a relationship, this person has engaged in which of the following activities?

Self-dealing

A corporation's shareholders are liable for a corporation's debt to what extent?

Shareholders are liable to the extent of their investment in the corporation.

If an agency contract is for personal services, the agent does not have the right to pursue _____ as a remedy if the principal does not perform as agreed.

Specific performance

When an asset purchase occurs, which of the following is true regarding the acquiring corporation assuming the liabilities of the selling corporation?

The acquiring corporation will assume the liabilities of the selling corporation if the sale occurs under fraudulent circumstances.

Which of the following statements is NOT true of promoters?

The are agents of infant corporations.

Which of the following is true for mergers and consolidations?

The shareholders of all involved corporations must approve the plan by a vote at a shareholder meeting.

What occurs in a self-tender offer?

The target corporation offers to buy its own shareholders' stock.

Which of the following statements is true of a consolidation?

Two or more corporations combine to form an entirely new corporation, with its own legal status.

Under the doctrine of respondeat superior, the principal/employer holds vicarious liability, which is best described by which of the following statements?

Vicarious liability holds the principal liable for any harm the agent/employee caused while working for the principal.

Perhaps the most important factor in determining whether a partnership exists is the following factor?

Whether profits are shared among the partners

A target corporation may defend itself by having a group within the corporation (usually management) purchase all the corporation's outstanding stock held by the public. This defense strategy is called _____.

a leveraged buyout

Employees are _______ of an employer.

agents

Agents who feel they are not being properly compensated may demand:

an accounting

According to the Revised Uniform Limited Partnership Act (RULPA), when the objective established in the certificate is complete, limited partnerships. can:

be dissolved

A(n) _____ suit is one filed by the shareholders on behalf of the corporation if corporate directors fail to sue when an individual has harmed the corporation, another corporation, or a director.

derivative

Neal is aware that Lara is making an agreement of behalf of a principal and also knows that Jonathan is the principal. In this situation, Jonathan is said to be a(n) _______.

disclosed principal

Once a partnership has been ______, the partners begin the process of _______.

dissolved; liquidation

The powers to acquire property, make contracts, and borrow money are known as _____.

express powers

A de facto corporation literally means a corporation _____

from the fact.

An agent who is not paid for his or her services is known as a _____ agent.

gratuitous

When a partnership adds another partner, the new partner assumes _____ liability for any obligations that occurred before the partner was added.

limited

Under the Uniform Partnership Act (UPA), if the partnership agreement does not establish the division of profits, all partners:

share equally in both profits and losses.

A(n) _____ main liability is for the extent of their investment when the company loses money.

shareholder's

Promoters begin the corporate creation and organization process by arranging for necessary capital, financing, and licenses. They raise capital for the infant corporation by making ______ agreements with ______ who agree to purchase stock in the new corporation.

subscription; subscribers

If a corporation does not issue physical stock certificates, the shares are considered:

uncertificated

Lisa does not know that Karen is acting on behalf of a principal; this the principal is said to be _____

undisclosed

According to the Uniform Partnership Act (UPA), if a partnership is liable, each partner has _____ personal liability.

unlimited

A partnership is a voluntary and consensual relationship that involves _____ for general partners.

unlimited personal liability

A(n) _____ dissolution occurs when a partner dissolves the partnership in violation of the partnership agreement.

wrongful

In a general partnership, default occurs in which of the following examples?

Any partner stops fulfilling the role of a partner to the business

A dissenting shareholder has a right to have his/her shares appraised and to receive monetary compensation from the corporation for their value. This is referred to as a(n) _____.

Appraisal right

Courts are likely to pierce the corporate veil in all but which of the following situations?

The corporation only has one shareholder.

Which of the following statements is true regarding a partially disclosed principal?

The principal and the agent are both considered parties to the contract and each may be liable separately from the other.

When multiple shareholders have suffered damages caused by the same act of a corporation, the shareholders can bring a _____ suit against the corporation.

class action

Principal-agent relationships are most significant for issues that are included in the category of _____ law.

contract

A ____ is an association of two or more persons to carry on as co-owners a business for profit.

partnership