The Sarbanes-Oxley Act of 2002 does not pro- vide for
A. creation of the Public Company Account- ing Oversight Board.
B. limited liability for the board of directors.
C. certification of the corporation’s 10-K and10-Q by the chief executive officer and
chief financial officer.
D. enhanced criminal penalties for violation of securities regulations.
When the principal intentionally or negligently causes a third party to reasonably
believe that an individual is acting as the principal’s agent, and the third party relies on
that belief, then
A. no agency relationship exists.
B. an express agency agreement is created.
C. the purported agent assumes personal liabil- ity for his or her actions.
D. an apparent agency may exist.
A certificate of assumed name is filed to
A. form a sole proprietorship.
B. form an assumed-name entity.
C. create a trademark.
D. give notice of your intent to transact busi- ness under a name other than your own.
If the corporation’s initial shareholders and board of directors are concerned about
double taxation of the corporation, they may consider
A. forming a limited liability corporation.
B. filing a Subchapter S election.
C. eliminating double taxation in the corpora- tion’s bylaws.
D. filing a tax-exempt status form with the Internal Revenue Service.
The income of sole proprietorships in theUnited States is
A. greater than the income of corporations.
B. less than the income of corporations.
C. less than the income of partnerships.
D. about the same as the income of corpora- tions.
6. The —is filed with these cretary of state to form a limited partnership.
A. articles of limited partnership
B. certificate of limited partnership
C. notice of limited partnership
D. limited partnership agreement
The self-regulating association formed to regulate over-the-counter markets is referred
to as the
A. National Association of Securities Dealers.
B. Securities and Exchange Commission.
C. OTCR egulation agency
D. National Broker and Dealer Association.
2. A(n)—is a securities marketthat is not represented by an actual physical location, but
rather by transactions that take place through a series of computer networks between
broker- dealers.
A. securities exchange
B. securities network
C. broker-dealer network
D. over-the-counter market
The agenda for a meeting of the shareholders of a corporation would notusually include
A. ratification of the acts of the board of direc- tors for the previous year.
B. election of the corporation’s officers.
C. election of the corporation’s directors for the upcoming year.
D. amendments to the articles of incorporation.
The promoter of a corporation is
A. the incorporator.
B. an individual or entity that actively assists in creating, projecting, and organizing a
corporation.
C. an individual who invests in stock of the corporation prior to its formation.
D. the individual or entity that signs and files the articles of incorporation.
A covenant not to compete will generally be enforceable if
A. no time period or geographical area is specified.
B. it is considered reasonable.
C. the agreement extends beyond 10 years after the employee’s employment terminates.
D. the covenant makes it impossible for the employee to obtain gainful employment
after his or her employment with the em- ployer terminates.
9. The—trades the largest volume of stock, and is generally considered to be the most
prestigious stock exchange.
A. New York Stock Exchange
B. American Stock Exchange
C. Chicago Board of Trade
D. United Stock Exchange
A corporate dissolution
A. terminates the corporate existence for all purposes.
B. terminates the corporate existence except for certain purposes such as winding up the
affairs of the corporation and liquidat- ing the corporation’s assets.
C. cancels the debts and obligations of the corporation.
D. is always involuntary.
Statutes of many states will shorten the time for valid post-dissolution claims if the dis-
solving corporation
A. sends written notice to all known creditors and publishes notice in a legal newspaper.
B. holds a meeting of creditors.
C. files a notice to creditors with the secre- tary of state.
D. sends notice to all shareholders.
Preferred shareholders are usually notenti- tled to
A. certain limited rights and privileges over shareholders of other authorized stock.
B. the right to convert their stock into common stock.
C. a preference over common stock share- holders in the distribution of profits.
D. voting preference over common stock shareholders.
When used in relation to the agency relation- ship, the master
A. retains some control over his or her servant(employee).
B. gives his or her servant (employee) full discretion to act on the master’s behalf.
C. hires the employee for a specific task for which the master is not responsible.
D. is not liable for any actions taken on his or her behalf by the servant (employee).
The —issued by the secretary of state or similar state authority grants foreign
corporations and other types of business or- ganizations the right to transact business in
that state.
A. articles of foreign corporation
B. certificate of assumed name
C. certificate of good standing
D. certificate of authority
A is a type of business organization that is very similar to a partnership, but is usual- ly
formed for one particular event or purpose, instead of an ongoing concern.
A. limited liability partnership
B. joint venture
C. joint partnership
D. limited venture
7. Instates that follow the Model Business corpo-ration Act, the —need not be included
in the articles of incorporation.
A. name of the corporation
B. names and addresses of the officers of the corporation
C. street address of the corporation’s initial registered office address
D. number of shares the corporation is author- ized to issue
The number of sole proprietorships in theUnited States is
A. greater than the number of corporations.
B. less than the number of corporations.
C. less than the number of partnerships.
D. about the same as the number of partner- ships.
A—is the authority given by a share- holder to another to exercise the shareholder’s
voting rights.
A. proxy
B. ballot
C. quorum
D. voting grant
An employment agreement is best described as an agreement
A. entered into between an employer and employee to set forth the rights and obli-
gations of each party with regard to the employee’s employment.
B. entered into between an employer and employee to guarantee the rights of an
employee.
C. that restricts the employee’s future em- ployment and actions that may possibly
compete with the employer’s business.
D. entered into between an employer and employee to guarantee the rights of the
employer with regard to the employee’s performance.
A qualified plan that establishes individual accounts for each plan participant and
provides benefits based solely on the amount contributed to the participants’ accounts is
referred to as a
A. defined benefit plan.
B. defined contribution plan.
C. welfare benefit plan.
D. employee stock ownership plan.
A—may be submitted to the internal Revenue Service to request a favorable de-
termination letter with regard to an employee benefit plan.
A. Form 5500
B. petition for approval
C. Form 5300 (Application for Determination for Employee Benefit Plan)
D. Form S-1 (IRS Determination Application)
A retirement benefit plan that is integrated with the employer’s contribution to Social
Security on behalf of the participant is referred to as a(n)
A. integrated plan.
B. Social Security plan.
C. combination plan.
D. welfare benefit plan.
An agreement, generally found within an employment agreement, that restricts the
employee’s future employment and actions that may possibly compete with the
employer’s business is referred to as a(n)
A. future employment clause.
B. restraint of trade clause.
C. employment-at-will agreement.
D. covenant not to compete.
are shares of stock that were previ- ously issued by the corporation, but later reac-
quired.
A. Issued shares
B. Treasury shares
C. Converted shares
D. Reacquisition shares
When hiring an employee, the sole proprietor must
A. file a certificate of assumed name.
B. file a notice with the secretary of state or other appropriate state official.
C. obtain a federal employer identification number.
D. amend the business’s certificate of assumed name.
5. Adirector may be personally liable for damag-escaused by
A. his or her failure to make the correct busi- ness decision.
B. his or her actions beyond the scope of the director’s duty.
C. fraudulent or tortious acts committed by the others in the corporation that the
director was reasonably unaware of.
D. his or her failure to vote on matters that personally involve the director.
The statutory merger is completed by
A. filing a resolution with the Securities and Exchange Commission.
B. filing articles of merger with the secretary of state or other appropriate state
authority.
C. agreement of the shareholders.
D. Resolution of the board of directors
An employer would notenter into an employment agreement to
A. be assured of retaining the services of the employee for a specified period of time.
B. restrict the employee from bringing his or her knowledge to the competition, at least
for a reasonable amount of time.
C. protect the employer’s trade secrets and confidentiality.
D. use the employment agreement to compel an employee to continue employment
against his or her will.
Qualified plans designed to give partial ownership of the corporation to the employees
are referred to as
A. employee stock ownership plans.
B. corporate pension ownership plans.
C. profit-sharing plans.
D. stock dividend retirement plans.
The most significant provisions of Section 5 of the Securities Act of 1933
A. establish the Securities and Exchange Commission (SEC) and give it the authority to
act to prevent securities fraud.
B. provide for the regulation of the sale of se- curities by the SEC and state agencies.
C. require the registration of securities and the use of prospectuses for the sale of
registered securities.
D. regulate the securities exchanges and over- the-counter markets.
Statutes that allow courts to exercise jurisdic- tion over nonresident defendants are
often referred to as
A. long-arm statutes.
B. door-closing statutes.
C. foreign corporation statutes.
D. foreign court statutes.
Advantages to doing business as a partnership include
A. partners do not need to pay income tax on their income from the partnership.
B. the partnership has “flow through” taxation.
C. the partnership is taxed as a separate entityand must pay all taxes.
D. the partnership has double taxation.
A limited liability company must have three or more members.
The statutes of some states require the filing of a copy of the articles of incorporation
with the county recorder or other county official of the state in which the registered
office of the corpo- ration is located.
In a stock acquisition, the acquiring corporation becomes a subsidiary of the target
corporation.
Directors are granted the statutory right to receive compensation for their services.
A qualified plan administrator is an individual or entity that adopts a qualified plan for
the benefit of the administrator’s employees or their beneficiaries.
Most states require that the articles of incorpo- ration contain the names and addresses
of the shareholders of the corporation.
No partner of a limited liability partnership ever has any personal liability for the debts
and obligations of the partnership.
Certain corporations considered accelerated fil- ers must file their 10-K
A. Before the end of their fiscal year
B. within 120 days after the close of their fis- cal year.
C. within six months of the close of their fiscal year.
D. within 60 days after the close of their fiscal year.
The issuance of stock of a corporation sometimes requires shareholder approval.
Partners must pay income tax on the portion of the partnership income that is allocated
to them.
The employment agreement is considered to be a binding contract between the
employee and the employer, and it must contain all of the elements of a valid contract.
The partnership is formed when the partnership agreement is filed with the secretary of
state’s office.
Amending the articles of organization usually requires the approval of all members of
the limited liability company.
All limited partners have an equal right to manage the affairs of the limited partnership.
Under the doctrine of respondeat superior,an agent is notresponsible for torts
committed while working for an employer.
A sole proprietor may transfer his or her business to another individual by selling all of
his or her shares of stock to that individual.