Q&A Hero

Q: The articles of Equestrian Stables Inc. 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.

Q: Custom Business Applications Corporation substantially complies with all conditions precedent to incorporation. Custom Business is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. ultra vires.

Q: Olinka is a registered agent for Pads, Pods & Phones, Inc., which incorporated in California. As a registered agent, Olinka a. agreed to buy stock in Pads, Pods & Phones before it existed. b. applied to California on behalf of Pads, Pods & Phones to obtain its corporate charter. c. represents Pads, Pods & Phones as a marketing agent. d. receives legal documents on behalf of Pads, Pods & Phones.

Q: Like the bylaws of other corporations, the bylaws of Retail Sales, 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.

Q: Stan incorporates his scientific products business as Tech Supply, Inc. Unless the articles of incorporation state otherwise, Tech Supply most likely has a. a finite, yet-to-be-determined existence. b. a one-year, nonrenewable existence. c. a one-year, renewable existence. d. perpetual existence.

Q: Myron and Norah would like to form Originals, Inc., to do business in the art market. Generally, the articles of incorporation for a corporation do not include a. the corporate name. b. the nature and purpose of the corporation. c. the capital structure of the corporation. d. the minutes of the first organizational meeting.

Q: Breads & Brews, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of a. each of the corporation's incorporators. b. each of the corporation's shareholders. c. the corporation. d. the corporation's initial registered agent.

Q: 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.

Q: Hudson and Ilka want to market a new line of kayaks and related gear under the brand name Journeys as a corporationJourneys Inc. To avoid income taxes at the corporate level, they should form a. a C corporation. b. a close corporation. c. an S corporation. d. a private corporation.

Q: Yellowbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid income taxes at the corporate level. To qualify, Yellowbox must a. be located in the United States. b. have more than one hundred shareholders. c. be a non-profit corporation. d. have more than one class of stock.

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

Q: Miracle Mobile Devices, Inc., is a private, for-profit corporation that (1) was formed for the purpose of manufacturing and distributing a newly patented tablet, (2) is owned by five shareholders, (3) is subject to double taxation, and (4) has made no public offering of its shares. Miracle is a. an S corporation. b. a close corporation. c. a nonprofit corporation. d. a professional corporation.

Q: Smalltown, Alabama is incorporated by the government. Smalltown is a. a foreign corporation. b. a public corporation. c. a private corporation. d. an alien corporation.

Q: 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.

Q: 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.

Q: A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate for a purpose other than making a profit. SDC is a. a foreign corporation. b. an alien corporation. c. a nonprofit corporation. d. not a corporation.

Q: Wiley incorporates his business as Wiley Wire Corporation in Texas. He and his group of shareholders intend to make a profit from their sales of fencing wire. Wiley Wire Corporation is a. a nonprofit corporation. b. not a corporation. c. an alien corporation. d. a private corporation.

Q: Painless Dental Equipment Company is incorporated in Colorado. In Wyoming, Painless is a. a domestic corporation. b. a foreign corporation. c. an alien corporation. d. a non-entity.

Q: 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.

Q: 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 legal person. d. a visible radiance.

Q: Erin is a shareholder in African Adventures. As a shareholder, Erin a. owns shares of stock in African Adventures. b. is the founder of African Adventures. c. has no say in the election of African Adventure's board of directors. d. is liable for all the debts of African Adventures.

Q: George is the founder of Excellent Exotics Corporation. Wilson is a shareholder and director and Bill is an officer. The daily business operations of Excellent Exotics are overseen by a. Bill. b. Wilson. c. George. d. George and Wilson.

Q: Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with a. the board of directors. b. the officers. c. the owners. d. the shareholders.

Q: Pola and Quincey want to form and do business as River Tours Corporation. A corporation can consist of a. no natural persons. b. one natural person but not more. c. one or more natural persons. d. only more than one natural person.

Q: Skyla and Terry want to form and do business as Unique Boutique Corporation. 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.

Q: Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

Q: The date when the principal of a bond is returned to the investor is called the maturity date.

Q: Bonds represent the borrowing of funds by firms.

Q: A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation.

Q: In the absence of express constitutional, statutory, or other provisions, the corporation has no implied powers.

Q: A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.

Q: Express powers of a corporation can be found in the articles of incorporation.

Q: A state constitution may resolve a conflict among documents involving a corporation.

Q: A business that holds itself out as being a corporation may not be able to deny corporate status, even if it makes no attempt to incorporate.

Q: A de jure corporation is one that is not properly formed.

Q: The registered agent is the person who can receive legal punishment (such as fines and imprisonment) on behalf of the corporation.

Q: The articles of incorporation serve as a primary source of authority for the corporation's future organization and business functions.

Q: Bylaws are the internal rules of management for a corporation.

Q: A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.

Q: The purpose of a corporation may be specified in its articles of incorporation.

Q: A corporate name must include the word Corporation, Incorporated, Company, or Limited, or abbreviations of these terms.

Q: Selecting the state in which to incorporate is an important step in the incorporation procedure.

Q: A partnership cannot be a shareholder in an S corporation.

Q: A close corporation can operate as an S corporation.

Q: If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level.

Q: A corporation whose shares are held by relatively few persons is a close corporation.

Q: The Revised Model Business Corporation Act gives a close corporation less flexibility in determining its rules of operation.

Q: A publicly held corporation is any corporation whose shares are publicly traded in a securities market.

Q: A foreign corporation normally does not need a certificate of authority to sell goods or services via the Internet or by mail.

Q: A corporation cannot be formed without a profit-making purpose.

Q: The U.S. Postal Service is a public corporation.

Q: An alien corporation is a corporation formed in another country.

Q: The state can suspend the entity's corporate status until the taxes are paid or even dissolve the corporation for failing to pay taxes.

Q: When a corporation earns profits, it must pass them on to shareholders in the form of dividends.

Q: One of the key advantages of the corporate form is the unlimited liability of its owners.

Q: The day-to-day business of a corporation is managed by officers employed by the board of directors.

Q: A corporate director is an "owner" of the corporation.

Q: A corporation does not possess the same right of access to the courts as natural persons.

Q: State laws regarding corporations are uniform.

Q: A corporation is an artificial being.

Q: Jade, Kelly, and Lila organize a nonprofit businessJKL Markets, Inc.to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL. Because the firm is a nonprofit entity, it is able to sell the groceries for less than a commercial grocer could. What form of business organization is JKL Markets? Is it significant that JKL is incorporated?

Q: Petra, Queenie, and Randall want to form Sales-to-Infinity, LLC (limited liability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?

Q: Buyers Club is an incorporated cooperative. Like other incorporated cooperatives, Buyers Club distributes profits to its owners on the basis of a. the amount of capital they contribute. b. the degree to which they participate in management. c. their transactions with the cooperative. d. the requirements of the state in which it was incorporated.

Q: Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other unincorporated cooperatives are generally treated like a. business trusts. b. corporations. c. joint stock companies. d. partnerships.

Q: Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

Q: Consumers in Delta City form a business organization to provide, without profit, an economic service to its members. This is a. a business trust. b. a cooperative. c. a corporation. d. a joint stock company.

Q: As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is a. limited to his capital investment in the trust. b. limited to his personal assets. c. nothing. d. unlimited.

Q: As the trustee of a business trust, Dwight is required to a. manage the trust and distribute its profits. b. assume liability for the trust's debts. c. draft a written trust agreement. d. none of the choices.

Q: Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of business organization makes it possible for these individuals to a. avoid personal liability for the acts of the cooperative. b. obtain an exemption from state laws governing corporations. c. pay no taxes on their business income. d. pool their resources to gain an advantage in the market.

Q: Neverend Music Company and Monotonous Metronome Corporation form a joint stock company. A joint stock company can be formed for, at the most, a. an implied duration of not more than six months. b. a perpetual existence. c. a single activity or transaction. d. a stated duration of not more than one year.

Q: National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is represented by a. partnership certificates. b. shares of stock. c. title documents. d. trust certificates.

Q: Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an investment group, or a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

Q: Exotic Stuff Company and First Pier, Inc., form a business organization to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

Q: Peyton, Qiana, and River form a syndicate to buy a professional basketball franchise. This syndicate could be set up as a. a joint venture. b. a corporation. c. a sole proprietorship. d. a limited liability company.

Q: Shae's Caf and Tommy's Grill form a joint venture. Shae can participate in the venture's management a. only to the extent that she assumes liability for the venture's debts. b. only to the extent of her investment in the venture. c. to any extent. d. to no extent.

Q: Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to a. business trusts. b. cooperatives. c. corporations. d. partnerships.

Q: Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

Q: Chocolate Sundry LLC's members and managers are Devlin, Effie, and Flavia. After Devlin's relationship to the firm ends, Effie and Flavia agree to discontinue the business. This is a. illegal. b. optional. c. required. d. wrongful.

Q: Flip is a member of Great States Trucking LLC. Flip's relationship to Great States ends, but the firm continues to do business. This is a. dissociation. b. dissolution. c. winding up. d. wrongful.

Q: Cecilia's Day Spa, LLC, is a member-managed limited liability company. If the law in Cecilia's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to a. capital contributions. b. participation in management. c. the number of members. d. transactions with the firm.