LES 305 Chapter 15

Creation and internal governance of corporations is governed by A)the Revised Model Business Corporation Act. B)common law. C)federal laws. D)state laws.

D)state laws.

Which of the following gives a person the right to vote at an annual meeting? A)a share of stock B)a bond C)a promissory note D)a debenture

A)a share of stock

Thirteen sorority sisters decide to start a dog-walking business. They incorporate under the name Pro Canine Walkers, Inc., and advertise their services throughout the city in newspapers and on flyers they post. All stock is owned by the 13 principals, and none is offered to anyone outside the 13. This corporation would be classified as a A)privately held corporation. B)privately held professional corporation. C)privately held public professional corporation. D)privately held public corporation.

A)privately held corporation

Happy Hops Brewery, Inc., has found that its business is expanding very quickly. The decision to hire three new delivery drivers would be made by A)the board of directors. B) The officers C)the shareholders. D)the board of directors with the consent of the officers.

B) The officers.

Corporate officers are A)elected by the shareholders and ratified by the board. B)appointed or elected by the board. C)appointed by the board and ratified by the shareholders. D)elected by the shareholders.

B)appointed or elected by the board.

The ________ are the owners of a corporation. A)officers B)shareholders C)board of directors D)promoters

B)shareholders

CJ and Danny have incorporated and obtained a $100,000 loan in their corporate name. The loan is payable with interest over five years. After paying on the loan regularly for two years, the business falters due to the economy, and CJ and Danny default on the loan. Their business has no assets. Which of the following statements best describes CJ and Danny's liability in this case? A) CJ and Danny are each individually liable for one quarter of the debt, with the corporation liable for the remaining half. B) CJ and Danny are each individually liable for one-third of the debt, with the corporation liable for the remaining third. C) CJ and Danny have no personal liability for the debt unless they pledged personal assets as collateral or signed a personal guarantee. D) CJ and Danny are jointly and severally liable for the entire balance.

C) CJ and Danny have no personal liability for the debt unless they pledged personal assets as collateral or signed a personal guarantee.

When does an initial public offering (IPO) occur? A)When a for-profit corporation seeks to become a nonprofit corporation. B)When a publicly held corporation seeks to become a privately held corporation. C)When a privately held corporation seeks to become a publicly held corporation. D)When a public corporation seeks to become a professional corporation.

C)When a privately held corporation seeks to become a publicly held corporation.

The document filed with the state that begins the incorporation process in most states is called the A)certificate of incorporation. B)declaration of incorporation. C)statement of incorporation. D)articles of incorporation.

D)articles of incorporation.