A(n)—is adissolution that is initiat-ed by creditors of an insolvent corporation, instead
of by the board of directors.
A. creditors’ dissolution
B. voluntary dissolution
C. administrative dissolution
D. involuntary dissolution
A corporation can be a partner in a partnership.
As of late 2011,
A. several states had adopted statutes approv- ing the formation of limited liability
limited partnerships.
B. most states had adopted the Uniform Lim- ited Liability Limited Partnership Act.
C. there was little uniformity among the states with regard to limited liability limited
part- nership law.
D. both A and C are true.
Unanimous consent of partners is not required to
A. dissolve the partnership.
B. amend the partnership agreement.
C. elect limited liability partnership status.
D. enter into transactions in the ordinary course of business.
The type of merger whereby the parent corporation is merged into a subsidiary is
referred to as a(n)
A. share exchange.
B. subsidiary merger.
C. upstream merger.
D. downstream merger.
9. A(n)—is an action brought by as share- holder on behalf of the shareholder and his or
her entire class of shareholders against the cor- poration stemming from a cause of
action belonging personally to the shareholder and the class the shareholder represents.
A. derivative action
B. class action
C. representative action
D. individual shareholder action
A is an action brought by a limited partner on behalf of a limited partnership to recover
a judgment in its favor.
A. limited partnership action
B. class action
C. derivative action
D. dissolution action
The primary source of business corporation law is
A. the statutes of the corporation’s state of domicile.
B. the Internal Revenue Code.
C. common law.
D. federal statutes.
The federal act regulating pension plans, to protect qualified plan participants and their
beneficiaries by governing the funding, vesting, administration, and termination of
pension plans, is known as the
A. Qualified Plan Act.
B. Employee Retirement Income Security Act of 1974 (ERISA).
C. Tax Equity and Fiscal Responsibility Act of 1982.
D. Pension Protection Act of
A voluntary dissolution is approved by the
A. shareholders of the corporation.
B. officers of the corporation.
C. creditors of the corporation.
D. president of the corporation.
Unlike the general partnership, in which all partners have personal liability for the debts
and obligations of the partnership,
A. the limited partnership offers limited per- sonal liability for all partners.
B. the limited liability partnership offers limited personal liability for all partners.
C. the limited liability limited partnership offers limited personal liability for all part-
ners.
D. both the limited liability partnership and the limited liability limited partnership offer
some degree of limited personal liability for all partners.
Most statutory mergers must be approved by the
A. surviving corporation’s board of directors.
B. merging corporation’s officers.
C. shareholders of the merging and surviving corporations.
D. president of the surviving corporation.
The sole proprietor’s liability for the actions of his or her employee is best described as
which of the following:
A. A sole proprietor is never responsible for torts committed by the sole proprietor’s
employee.
B. A sole proprietor is responsible for actions taken by an employee while the employee
is acting on behalf of the employer in the normal course of business.
C. Both the sole proprietor and the employee may be liable for torts committed by
theemployee.
D. Both B and C.
Securities that represent loans to the corpora- tion that must be repaid are referred to as
A. equity securities.
B. par value securities.
C. debt securities.
D. redeemable securities.
—- do not represent a type of debt financingA. Bank loans
B. Corporate bonds
C. Premium bonds
D. Shares of preferred stock
The instrument that represents the right to receive a fraction of a share is referred to as a
A. scrip.
B. fractional share certificate.
C. dividend certificate.
D. stock dividend.
A limited liability company is formed when
A. the articles of organization are signed.
B. all members sign the certificate of organiza- tion.
C. the articles of incorporation are filed with the secretary of state or other appropriate
state authority.
D. the articles of organization are filed with the secretary of state or other appropriate
state authority.
A is a combination of two or more corporations, whereby one of the corporations
survives and absorbs one or more other corporations, which cease to exist.
A. consolidation
B. statutory share exchange
C. merger
D. reorganization
The allows courts to consider a certain transaction with characteristics of a merger to be
considered a merger, regardless of what it is called, to prevent an injustice to third
parties.
A. equitable merger rule
B. statutory merger rule
C. de facto merger doctrine
D. stock acquisition doctrine
An agency relationship may notbe created
A. by express contract.
B. by conduct of the principal and agent.
C. without the principal’s knowledge or con- sent.
D. by ratification.
The assets of a limited liability company are owned by the
A. designated member.
B. limited liability company itself.
C. limited liability company managers.
D. imited liability company members.
In states that follow the Model Business Corpo- ration Act, incorporators
A. execute and file the articles of incorporation.
B. are also the first board of directors.
C. are elected by the board of directors.
D. sign the corporation’s bylaws.
Limited liability companies in the United States
A. were the first type of corporation provided for by state statutes.
B. have been popular since the 1950s.
C. are more numerous than corporations, part- nerships, and sole proprietorships
combined.
D. have become an increasingly popular form of business organization.
The shares provided for in a corporation’s articles of incorporation that may be issued to
shareholders at a future date are referred to as
A. issued shares.
B. authorized shares.
C. outstanding shares.
D. treasury shares.
Procedures for qualifying to do business as a foreign corporation are generally found
with- in the
A. bylaws of the foreign corporation.
B. statutes of the corporation’s state of domicile.
C. statutes of the foreign state.
D. corporation’s articles of incorporation.
8. The name—would probably not bean
acceptable corporate name.
A. “ABC Furniture Rental”
B. “ABC Furniture Company”
C. “ABC Furniture, Inc.”
D. “ABC Furniture, Incorporated”
A director’s duties to the corporation and shareholders do notinclude a
A. fiduciary duty.
B. duty of care.
C. duty to have firsthand knowledge of all business affairs of the corporation.
D. duty of loyalty.
In states that have adopted partial shield stat- utes, partners may notbe held personally
liable for
A. any debts and obligations of the partner- ship.
B. partnership obligations incurred due to their own wrongdoing.
C. partnership debts and obligations incurred due to the wrongdoing of other partners.
D. both B and C.
11. The —-can be filed by apartners ship to give notice of the authority, or lack of
authority, of certain partners.
A. statement of authority
B. notice of partnership authority
C. partnership articles
D. statement of agreement
New general partners may usually be admitted to a limited partnership
A. by permission of the managing partner.
B. by completing an application for admission to limited partnership.
C. with the unanimous written consent of all partners.
D. if there is sufficient income to pay the new partner’s salary.
In states following the Model Business Corporation Act, shareholder approval of a
statutory plan of exchange
A. is not necessary.
B. does not require voting by voting groups.
C. must be accomplished in the same manner as shareholder approval of a statutory
merger.
D. is not required of the target corporation.
One advantage to debt financing over equity financing is that
A. debt financing can be repaid when the cor- poration has a surplus.
B. interest paid on debt financing may be tax deductible.
C. debt financing maintains a lower debt-to- equity ratio.
D. interest is paid on debt securities at the dis- cretion of the directors and need not be
repaid if the corporation does not perform as well as expected.
The—of a limited partners ship do nothave personal liability for the debts and
obligations of the limited partnership.
A. partners
B. limited partners
C. general partners
D. managing partners
The activities performed when winding up the affairs of a dissolving corporation do
notinclude
A. paying the outstanding debts of the cor- poration.
B. collecting the assets of the corporation.
C. distributing the remaining assets of the corporation to the shareholders.
D. filing articles of dissolution with the
Securities and Exchange Commission.
Under the Sherman Act, the law is violated if a company tries to maintain or acquire a
monopoly position through unreasonable methods.
Any securities offered, sold, or delivered through any means of interstate commerce
(including the U.S. Postal Service) are con- sidered to be part of a private offering.
Qualified retirement plan sponsors can choose to be regulated under either the Internal
Revenue Code or the Employee Retirement Income Security Act of
Depending on the provisions of the pertinent state statutes, corporations may be
liquidated either before or after the articles of dissolution are filed.
The prospectus, which constitutes Part I of the Registration Statement, contains
disclosures required by the Securities and Exchange Commission.
When a sole proprietor uses an assumed name, some states require that a notice of
intent to transact business under an assumed name be published.
An individual may become a member of a limited liability company only if admitted
pursuant to the provisions of the company’s articles of organization or operating
agreement.
Limited liability companies in most states are subject to annual reporting requirements
with the secretary of state or other appropriate state authority.
A corporation must have certain minimum contacts in a foreign state for the courts of
that state to have jurisdiction over the corporation.
Under the Uniform Partnership Act (1997), partnership property is held in a tenancy of
partnership.
A formal preincorporation agreement may be desirable when it is necessary to bind
partici- pants to make future financial contributions that may be essential to the
business venture.
The qualified foreign corporation generally has the same, but no more than, rights and
privileges that domestic corporations have.
Unlike most contracts, consideration need not be exchanged to form an agency
relationship.
5. Under the Uniform limited partners ship act of 2001, —-may participate in the
managementof the limited partnership business and have limited liability status.
A. General partners
B. limited partners
C. limited partners and general partners
D. no partners
It is generally considered illegal to place restrictions on the transfer of shares of stock of
a statutory close corporation.
All partners share in the profits and losses of the partnership to some extent.
Professionals from several different fields, such as doctors, lawyers, and accountants,
can consolidate their businesses to form one professional corporation.
Information on incorporation procedures may usually be obtained from the office of the
secre- tary of state or other appropriate state authority.
The dissolution of a corporation that has not issued stock may be approved by the
incorpora- tors or by the board of directors, if one was named in the articles of
incorporation.
The trend in modern corporate law is to require a par value of $1.00 per share or more
on each share of authorized stock.