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Q:
Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This transaction was
A.a consolidation.
B.a share exchange.
C.a short-form merger.
D.a termination.
Q:
Realty Credit Company and Security Mortgage Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with
A.the county recording office.
B.the local realtors' association.
C.the state's secretary of state.
D.the federal Bureau of Land Management.
Q:
Vacation Adventures, Inc., and Wild River Tour Company plan to merge. Most likely, the articles of merger will be filed with
A.the county recording office.
B.the local chamber of commerce.
C.the state's secretary of state.
D.the national travel agents' association.
Q:
Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of Downtown Realty Corporation for some of Corporate Properties's shares. Both Corporate Properties and Downtown Realty continue to exist. This is
A.a consolidation.
B.a share exchange.
C.a short-form merger.
D.a hold-up.
Q:
Like other corporations, Biopesticide Corporation can extend its operations through
A.a share exchange.
B.a dissolution.
C.a termination.
D.a winding up.
Q:
Realty Credit Company and Second Mortgage Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with
A.the county recording office.
B.the Securities and Exchange Commission.
C.the state's secretary of state.
D.the U.S. Department of Justice.
Q:
Office Company and Keen Company wish to combine all assets, stock, and personnel into a new firm to be called OK Corporation. This is
A.a consolidation.
B.a merger.
C.a share exchange.
D.a takeover.
Q:
Penn files a suit against Roadway Sign Company While the suit is pending, Roadway consolidates with Synchronized Signal Corporation to form Traffic Management, Inc. Now, liability in the suit, if any, rests with
A.Traffic.
B.Roadway and Synchronized.
C.Penn.
D.no one.
Q:
A merger between Grain Mills Corporation and Farm2Fork Distribution Inc. can be expressed as Grain Mills + Farm2Fork =
A.Farm2Fork.
B.Harvest Dining Corporation.
C.Harvest Dining Corporation + EZ Brewing Company.
D.EZ Brewing Company.
Q:
Corn Candy Corporation (CCC) has a right of action against Bio Farms, Inc. CCC merges with Agri Sweeteners, Inc., with Agri absorbing CCC. After the merger, CCC's right of action against Bio Farms can be exercised by
A.CCC.
B.Agri Sweeteners.
C.Bio Farms.
D.no one.
Q:
Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company combine so that all that remains after the papers have been signed is Ridgeway. This is
A.a consolidation.
B.a merger.
C.a purchase of assets.
D.a share exchange.
Q:
Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with
A.Jen.
B.Kopper Kettle.
C.Luminous.
D.no one.
Q:
Mari buys 500 shares of common stock in National Livestock Traders, Inc. As a shareholder of record, Mari owns a proportionate interest in terms of
A.control, earnings, and net assets.
B.control only.
C.earnings and net assets only.
D.neither control nor earnings and net assets.
Q:
Omega Corporation makes and markets digital timers, clocks, and related products. Like other business corporations, Omega issues securities to
A.increase its market share.
B.obtain financing.
C.reduce its production costs.
D.safeguard its facilities.
Q:
Rapid Pest Control itself out to others as being a corporation but makes no attempt to incorporate. Ponce signs a contract with Rapid Pest Control that is not performed. Ponce files a suit against the firm. The court will likely hold that Rapid Pest Control is
A.a corporation by estoppel.
B.an alien corporation.
C.an S corporation.
D.ultra vires.
Q:
Wild & Scenic River Tours, Inc., is a corporation. Wild & Scenic has the implied power to
A.issue stocks and bonds.
B.execute contracts and negotiable instruments.
C.buy and sell (or lease) property.
D.perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.
Q:
Superior Home Products, Inc., is a corporation. Superior's implied powers enable it to
A.amend the articles of incorporation.
B.bring a derivative suit.
C.declare dividends.
D.perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.
Q:
Eager Beaver Corporation fails to hold a meeting to adopt bylaws. Under this circumstance, Eager Beaver will still be treated as a legal corporation in those states that recognize the common law doctrine of
A.corporation by estoppel.
B.de facto corporation.
C.de jure corporation.
D.ultra vires.
Q:
Caffeine Caf, 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:
Sullivan and Taylor want to form a corporation to provide catering services. The first step in the incorporation procedure is to
A.file the articles of incorporation.
B.hold the first organizational meeting.
C.secure a corporate name.
D.select a state in which to incorporate.
Q:
The abbreviation "P.A." in the name "Painless Dental, 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:
Fact Pattern 24-2
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors.
Refer to Fact Pattern 24-2. Later, Bertram dies. With respect to the stock transfer restriction agreement, Bertram's death most likely
A.triggers the division provision.
B.invalidates the entire agreement.
C.voids the division provision only.
D.violates the entire agreement.
Q:
Fact Pattern 24-2
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors.
Refer to Fact Pattern 24-2. A reasonable purpose for a stock transfer restriction in a closely held corporation, like the agreement between Bertram, Claudia, and Dynah, is
A.a desire to limit the participation of outsiders in the firm.
B.a goal to restrain insiders from taking advantage of their position.
C.an attempt to restrain the free flow of commerce among investors.
D.a wish to restrict the transfer of the shareholders' physical assets.
Q:
Gelato Ice, Inc., is incorporated in the state of New Jersey and is doing business in the state of New York. In New York, Gelato is properly referred to as
A.a domestic corporation.
B.a foreign corporation.
C.an alien corporation.
D.a de jure corporation.
Q:
Raw Resources Corporation authorizes Stefan, its employee, to oversee its mining operation. In the course of this employment, Stefan commits a tort. Liability for this tort most likely rests with
A.neither Raw Resources nor Stefan.
B.Raw Resources and Stefan.
C.Raw Resources but not Stefan.
D.Stefan but not Raw Resources.
Q:
Fact Pattern 24-1
Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its timber operation. In the course of his employment, Niles disposes of the operation's waste illegally. Orson is a Mountaintop shareholder.
Refer to Fact Pattern 24-1. Liability for Niles's act most likely rests with Orson to
A.no extent.
B.the proportionate extent of the number of shares Orson owns.
C.the amount of Orson's investment in the firm.
D.the full extent.
Q:
Fact Pattern 24-1
Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its timber operation. In the course of his employment, Niles disposes of the operation's waste illegally. Orson is a Mountaintop shareholder.
Refer to Fact Pattern 24-1. With respect to Mountaintop and Niles, liability for this crime most likely rests with
A.neither Mountaintop nor Niles.
B.Mountaintop and Niles.
C.Mountaintop only.
D.Niles only.
Q:
Ivy and Justin want to form and do business as Kayak Adventures Corporation. A corporation can be owned by
A.natural persons only.
B.artificial persons only.
C.artificial or natural persons.
D.neither "artificial" nor "natural" persons.
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:
Felicity and Gideon want to form and do business as Home Healthcare Corporation. A corporation is
A.a natural being.
B.a tangible thing.
C.an artificial person.
D.a visible radiance.
Q:
In some circumstances, a shareholder may petition a court to have the corporation dissolved.
Q:
The state can bring an action to dissolve a corporation that has failed to pay its annual taxes.
Q:
When a corporation is dissolved voluntarily, the corporation must file articles of dissolution with the state.
Q:
When a corporation is dissolved voluntarily, the corporation must notify its creditors of the dissolution.
Q:
Dissolution can be brought about voluntarily by the directors and shareholders of a corporation.
Q:
Federal securities laws strictly control the terms, duration, and circumstances under which most tender offers are made.
Q:
A corporate takeover is the process of acquiring control over a corporation by the purchase of a substantial number of the voting shares of its stock.
Q:
Generally, a corporation that purchases the assets of another corporation is automatically responsible for the liabilities of the selling corporation.
Q:
A corporation that is selling all of its assets must obtain approval only from its board of directors.
Q:
Once a dissenting shareholder elects appraisal rights, the shareholder loses his or her shareholder status.
Q:
Shareholder appraisal rights do not usually extend to short-form mergers.
Q:
A short-form merger is the legal combination of two or more corporations online.
Q:
In a share exchange, some or all of the shares of one corporation are exchanged for some or all of the shares of another corporation.
Q:
The board of directors of each corporation involved must approve a share exchange.
Q:
The officers employees of each corporation involved must approve a merger.
Q:
After a consolidation, there is only one surviving corporation.
Q:
A merger involves the legal combination of two or more corporations, only one of which continues to exist.
Q:
Venture capital is capital provided to new business ventures by professional, outside investors.
Q:
Usually, a private equity firm buys an entire corporation and may later reorganize it as a publicly held corporation.
Q:
Preferred shares normally have a fixed maturity date on which the firm must pay them off.
Q:
Common stock provides a proportionate interest in the corporation with regard to net assets.
Q:
Bonds represent the purchase of ownership in a business firm.
Q:
Firms are obligated to return a principal amount per share to each holder of common stock.
Q:
Stocks represent the borrowing of funds by firms.
Q:
Common stock provides a proportionate interest in the corporation with regard to control.
Q:
A court will not pierce the corporate veil of a corporation that is merely too "thinly" capitalized.
Q:
To pierce the corporate veil means to ignore the corporate structure, exposing the shareholders to personal liability.
Q:
When the corporate privilege is abused for personal benefit, the courts will require the owners to assume personal liability.
Q:
A court will not pierce the corporate veil of a corporation that is formed merely to evade an existing legal obligation.
Q:
A close corporation cannot operate as an S corporation.
Q:
A corporation whose shares are held by relatively few persons is a partnership.
Q:
A corporation is liable for the torts committed by its officers within the course and scope of their employment.
Q:
A holding company is a company whose business activity consists of holding shares in another company.
Q:
Normally, corporate shareholders are personally liable for the obligations of the corporation.
Q:
A corporate director is the owner of the corporation.
Q:
Sally and Tom decide to go into business, selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties, but the agreement says nothing about the management of the firm or a division of profits. Without Sally's knowledge, Tom tells United Computer Products, Inc., that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy. In the first year, e-Buy makes a profit of $50,000. What are the partners' rights with respect to the management of the firm? Is the partnership bound to the contract with United? Do the partners split the first year's profits? If so, how much is each entitled to?
Q:
Ewa, the owner of Face-2-Face Enterprises, is a sole proprietor. What are the chief characteristics, advantages, and disadvantages of this form of business organization? Ewa wants to obtain additional capital to expand Face-2-Face, but she does not want to lose control of the firm. As a sole proprietor, what is her best option to attain these goals?
Q:
Felipe is a member of Great States Transport LLC. Felipe'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.
Q:
CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed otherwise, participants in the firm's management will be considered to include
A.all members.
B.no member.
C.one member.
D.two members, including at least one general partner.
Q:
Pizza & Cookies, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement and the state LLC statute do not cover. The dispute is governed by
A.no law.
B.the federal Uniform LLC Law.
C.the principles of partnership law.
D.the state corporation statute.
Q:
B2B, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by
A.the applicable state LLC statute.
B.the federal Uniform LLC Law.
C.the principles of partnership law.
D.the state corporation statute.
Q:
China Bank is a foreign entity-a firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can
A.act as a creditor, but cannot otherwise invest or participate.
B.become a member.
C.not become a member, but can participate in its operations.
D.not become a member or otherwise participate in its operations.
Q:
Energy Green, LLC, is a limited liability company. Instead of distributing its profits to its members, Energy wants to reinvest the profits in its business. For this reason, Energy may prefer to be taxed as
A.a corporation.
B.a partnership.
C.a sole proprietorship.
D.a natural person.
Q:
QuizBooks LLC is a limited liability company. Like any other LLC, unless QuizBooks chooses otherwise, the firm will be taxed as
A.a corporation.
B.a natural person.
C.a partnership.
D.a sole proprietorship.
Q:
Jay is a member of Kitchen Cookouts, LLC, a limited liability company. Jay is liable for Kappa's debts
A.in proportion to the total number of members.
B.to the extent of his investment in the firm.
C.to the extent that the other members do not pay the debts.
D.to the full extent.
Q:
Sustainable Caf LLC is a limited liability company. Like any other LLC, unless Sustainable Caf chooses otherwise, the firm will be taxed as
A.a corporation.
B.a sole proprietorship.
C.a partnership.
D.none of the choices.
Q:
Location! Realty LLC is a limited liability company (LLC). Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of
A.all states.
B.every state in which its members are citizens.
C.no state.
D.only the state in which it was formed.
Q:
Dani is considering forms of business organization for her financial advisory firm. Like most states, Dani's state requires that to form a limited liability company, she must file with a central state agency
A.articles of certification.
B.articles of formation.
C.articles of organization.
D.no specific documents.
Q:
Coco is considering forms of business organization for her confections business-Coco's Cupcakes. Most states require that a limited liability company have
A.no minimum number of members.
B.at least one member.
C.at least two members.
D.at least three members, including at least one general partner.