Chapter 09 Daily Double
Which of the following statements about corporations is true? (A) A promoter files articles of incorporation with the state gov't 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 isn't liable for the consequences.
(A)
A partnership offers limited liability to its owners. (T/F)
False
Equity holders' claims are always satisfied before creditors' claims. (T/F)
False
The owners of a corporation are called stockholders. (T/F)
TRUUUUUEEEE
Closely held corporations face the loss of limited liability through application of the doctrine known as piercing the corporate veil. (T/F)
True
Common stockholders share all 3 property rights associated with stock ownership in proportion to their holdings. (T/F)
True
Corporations are artificial persons created under the law of a state. (T/F)
True
Corporations incur the disadvantage of double taxation. (T/F)
True
In general, the creditors of a corporation cannot reach the personal assets of the shareholders to satisfy the corporation's obligations. (T/F)
True
Although the law of partnerships originated in the common law, all states except __________ adopted the Uniform Partnership Act. (A) Louisiana (B) Alabama (C) Nevada (D) Wisconsin
(A)
Which of the following refers to a business venture that has no legal existence apart from the owner? (A) Corporation (B) Limited Liability Company (C) Sole Proprietorship (D) Partnership
(C)
Although shareholders are the owners of the corporation, control rests with the board. (T/F)
True
Which of the following is a feature of a corporation? (A) Double taxation (B) Unlimited liability (C) Definite duration (D) Prohibition of tax-deductible fringe benefits
(A)
Which of the following statements is true of a limited liability partnership? (A) It is taxed like a general partnership. (B) No annual filings or fees are required. (C) To bring a limited liability partnership into existence, the owners file articles of organization with the state. (D) It is more like a limited liability company than a general partnership.
(A)
A shareholder derivative suit is brought by a minority shareholder, but any recovery injures to the corporation. (T/F)
True
Blue sky laws are primarily applicable to solely intrastate offerings of their former significance. They are primarily applicable to solely intrastate offerings. (T/F)
True
Where mergers or direct acquisitions fail, a takeover can be attempted. (T/F)
True
the Securities Act of 1933 seeks to ensure full disclosure of all material facts about the investment opportunity to offerees before they invest. (T/F)
True
Corporations distribute their aftertax income to their shareholders as _______. (A) Fringe benefits (B) Dividends (C) Exempt securities (D) Disgorgements as dividends, the shareholders are taxed on that amount as well, hence, "double taxation."
(B)
On termination of a corporation, which of the following has the highest priority for payment? (A) Dividend arrearages owed to preferred shareholders (B) Claims of common shareholders (C) Claims of creditors (D) Claims of directors
(C)
Which of the following is true of limited liability companies? (A) The management structure of a limited liability company is extremely rigid. (B) A single-member limited liability company cannot be treated as a corporation. (C) The operating agreement of a limited liability company is most likely to be in the oral form. (D) To create a LLC, the owner(s) must file articles of organization with the state.
(D)
Which of the following is true of the partnership form of business? (A) The vast majority of partnership agreements are written. (B) An assignee of a partnership interest has the right to participate in control and enjoys the status of partner. (C) The partners are not personally liable for the partnerships' obligations should it default. (D) Events in the private lives of the partners can seriously impact the business venture.
(D)
Which of the following statements is true of the formation of partnerships? (A) Partnership accounting systems are the least expensive of all the business forms. (B) The partnership form generally requires a number of annually recurring events such as state filings or statutorily mandated meetings of owners. (C) The vast majority of partnership agreements are written. (D) The co-owners of a partnership must tinted to join in the sharing of risks and rewards via the active conduct of business
(D)
Which of the following statements is true of the sole proprietorship form of business organization? (A) Legal filings are required to establish a sole proprietorship. (B) A sole proprietorship is a separate legal entity. (C) The owner of a sole proprietorship is not personally liable for all obligations of the business. (D) A sole proprietorship is not a taxable entity.
(D)
An S corporation pays double tax on its income. (T/F)
False
In a limited liability company, the owners are referred to as interest holders. (T/F)
False
In a limited partnership, the limited partners manage the business and are personally liable for all losses. (T/F)
False
In the context of the capital structure of corporations, equity capital has short-term horizon. (T/F)
False
Online trading services provide professional guidance to investors can be less expensive, but which also tend to leave investors without professional guidance. (T/F)
False
Sole proprietorships are mutual agencies of the proprietor to pursue a venture. Thus, it is the default business form for single owners. (T/F)
False
