In states that follow the Model Business Corporation Act, the foreign corporation is
notrequired to when applying for authority to transact business in that state.
A. file an application for a certificate of au- thority with the secretary of state or other
appropriate state authority
B. designate a registered agent and regis- tered office for service of process in
theforeign state
C. file a copy of the corporation’s articles of incorporation with the secretary of state or
other appropriate state authority of the foreign state
D. file a certificate of existence (or certificate of good standing) from the foreign corpo-
ration’s state of domicile with the secre- tary of state or other appropriate state authority
of the foreign state
A sole proprietorship is considered to be
A. an entity formed to protect the small busi- nessperson from personal liability.
B. an extension of the individual sole pro- prietor.
C. any business organization that is owned, managed, and operated by only
oneindividual.
D. an entity that is easily transferred from one individual to another.
Shareholders usually elect the corporation’s
A. directors.
B. managers.
C. officers.
D. members.
An agent’s duties to the principal include
A. the duty of loyalty.
B. the duty to act without compensation.
C. the duty to perform any tasks requested by the principal.
D. the duty to compensate the principal.
Disadvantages to transacting business as a sole proprietorship include
A. double taxation of the sole proprietor’s income.
B. personal liability for the debts and obliga- tions of the business.
C. the limited duration of the sole proprietor- ship allowed by state law.
D. costly filing fees for forming the sole proprietorship.
When a merger becomes effective, the
A. shareholders of the surviving corporation surrender their shares.
B. articles of incorporation of the merging corporation become effective.
C. separate existence of every corporation or eligible entity that is merged into the
survivor ceases.
D. shareholders of the merging corporationhave no ownership in the surviving
corporation.
2. The —set(s) forth the rules and guide lines for the internal governance and control of
a corporation.
A. articles of incorporation
B. bylaws
C. articles of corporate rules
D. organizational charter
The income of partnerships in the United States is
A. about the same as the income of corpora- tions.
B. greater than the income of corporations.
C. less than the income of corporations.
D. greater than the income of sole proprietor- ships.
State entity conversion statutes generally provide for the conversion of
A. stock from one shareholder to another.
B. business corporations to nonprofitcorporations.
C. one business corporation to another business corporation.
D. a corporation to a noncorporate entity.
The method of voting that gives minority shareholders the right to cumulate their votes
and increase their chances of electing a director is called
A. preemptive voting rights.
B. voting by ballot.
C. cumulative voting.
D. minority shareholder voting.
State partnership laws generally have provisions
A. requiring a vote of all partners to elect limited liability partnership status.
B. requiring the filing of a statement of quali- fication to elect limited liability
partnership status.
C. establishing annual reporting requirements for limited liability partnerships.
D. providing for all of the above.
A partnership is not required to have to be valid.
A. at least two partners
B. a written partnership agreement
C. partners who co-own the partnership busi- ness
D. the purpose of earning a profit
The number of limited liability partnerships in the United States has
A. decreased since
B. grown at an impressive rate.
C. surpassed the number of corporations.
D. remained about the same since
A shareholder’s right to purchase newly issued shares of the corporation’s stock in an
amount proportionate to his or her current stock owner- ship is referred to as
A. the right of first refusal.
B. shareholder’s purchase rights.
C. preemptive rights.
D. cumulative rights.
Consent of all members of the limited liability company is notusually required to
A. amend the limited liability company’s operating agreement.
B. enter into contracts in the normal course of business.
C. amend the limited liability company’s arti- cles of organization.
D. admit a new member to the company.
The annual report to shareholders typically does notinclude
A. copies of minutes of all meetings of the board of directors for the previous fiscal
year.
B. corporate financial statements.
C. information concerning the business done by the corporation and its subsidiaries dur-
ing the most recent fiscal year.
D. information relating to the corporation’s industry segments.
Corporations do notgenerally offer sharehold- ers the ability to
A. limit their personal liability for the corpora- tion’s debts and obligations.
B. avoid double taxation.
C. transfer their shares of ownership.
D. elect directors to oversee the management of the corporation.
Employmentatwillis
A. any employment that is covered by a formal employment agreement.
B. employment for a specified time period.
C. employment for an agreed-upon compen- sation that can be terminated at any time
by the employer or employee.
D. employment for a specified time period that is not restricted by a covenant not to
compete.
Partners act as agents
A. for third parties when dealing with the part- nership.
B. for the partnership only when that authority is expressly given.
C. only to the extent that authority is granted in the partnership agreement.
D. of the partnership and the other partnerswhen dealing with third parties.
The statement of qualification to elect limited liability partnership status generally does
not include
A. the name of the limited liability partnership.
B. the street address of the partnership within
the state where the statement is filed.
C. a statement that the partnership elects to be a limited liability partnership.
D. a statement indicating which partners are general partners and which partners are
limited partners.
A special type of power of attorney designed to continue for certain purposes even after
the incapacity of the principal is referred to as a
A. special power of attorney.
B. will power of attorney.
C. durable power of attorney.
D. general power of attorney.
When deciding whether to qualify a corporation in a foreign state, all of the following
must be taken into consideration, except
A. the foreign state’s statutes with regard to the regulation of the internal affairs of
corporations.
B. the extent, duration, and nature of the corporation’s involvement in the foreign state.
C. the foreign state’s statutory interpretation of what does, or does not, constitute
transacting business in that state.
D. the cost of qualification and the penalties for trans acting business in the foreign
state without authority.
State statutes generally do not provide for the right to —-unless otherwise a men dedin
the partnership agreement.
A. an equal amount of the partnership profits
B. share equally in the management of the partnership
C. access of the books and records of the part- nership
D. be compensated for all time spent on behalf of the partnership
A corporation is a corporation that owns stock in another corporation sufficient to
control that corporation.
A. sister
B. parent
C. subsidiary
D. control
—- is the electronic system for filing documents with the Securities and
ExchangeCommission.
A. EAGER
B. The SEC Electronic Filing System
C. EDGAR
D. Prospectus
A profit-sharing plan is a type of
A. defined contribution plan.
B. defined benefit plan.
c. Employee stock owner ship plan
D. employee welfare benefit plan.
Both general partnerships and limited partner- ships
A. must include at least one limited partner.
B. must include at least one general partner.
C. Are formed by filing a certificate with the secretary of state.
D. offer limited liability to all partners.
In states that have adopted full shield statutes, partners may be held personally liable for
A. any debts and obligations of the partner- ship.
B. partnership obligations incurred due to their own wrongdoing.
C. no debts and obligations incurred by the partnership.
D. partnership debts and obligations incurred due to the wrongdoing of other partners.
The dissolution of a corporation by the state of the corporation’s domicile, usually for
failing to pay income taxes or file annual reports, is referred to as
A. voluntary dissolution.
B. procedural dissolution.
C. administrative dissolution.
D. state dissolution.
Under the Revised Uniform Limited Partnership Act, limited partners do not have the
right to
A. assign their interests in the limited partner- ship.
B. inspect the books and records of the limited partnership.
C. vote on certain extraordinary actions taken by the limited partnership.
D. participate in the management of the lim-
ited partnership.
State laws regulating securities are often re- ferred to as
A. the 1933 State Securities Act.
B. blue sky laws.
C. red herring laws.
D. the 1934 State Securities Exchange Act.
The principal’s duties to the agent do notinclude
A. the duty to compensate the agent as agreed on.
B. the duty to cooperate with the agent.
C. the duty to exercise reasonable care to avoid placing the agent in harm’s way.
D. the duty to always put the agent’s interests first.
Advantages to transacting business as a sole proprietorship include
A. double taxation on the income of sole proprietors.
B. limits on the sole proprietor’s personal liability.
C. the ease and low cost of starting the business.
D. the sole proprietor’s lack of responsibility for actions by employees or agents.
The Internal Revenue Service’s “Check theBox” regulations make it possible for
A. individuals to choose what type of entity they would like to form.
B. limited liability companies to be taxed as partnerships, unless the members check the
box on a form to elect to be taxed as a cor- poration.
C. corporations to elect partnership taxation.
D. members of limited liability companies tochoose which state laws they would like
the company to be taxed under.
To be considered tax-exempt for federal income tax purposes, a corporation must
A. file articles of incorporation of a nonprofit corporation.
B. include a tax-exempt provision in its by- laws.
C. publish an affidavit signed by all share- holders.
D. file an application for tax-exempt status with the Internal Revenue Service pursuant
to IRC § 501(c).
Limited liability companies and limited liability partnerships are usually notrequired to
obtain a certificate of authority from any foreign state in which they transact business.
Partners may purchase insurance to cover many potential liabilities.
The rights and preferences of an issued class of stock may be amended by the
unanimous consent of the board of directors.
The limited partner in a limited partnership is often considered to be more of an
investor than an actual partner to the partnership.
Limited liability partnerships are formed when the partners sign a limited liability
agreement.
Defined benefit plans establish an individual account for each participant.
The limited partnership must be formed by filing a certificate of limited partnership
with the secretary of state or other appropriate state authority.
In a derivative action, the cause of action belongs to the individual shareholder.
A partner may designate a substitute to assume all of his or her rights in and
responsibilities to a partnership.
Corporations have the right to own property, including real estate, in the corporate
name.
It is possible for a corporation to be dissolved by a minority of its shareholders.
All members of a limited liability company must be individuals.
Foreign limited liability partnerships generally do not need to qualify to do business in
states where they do business unless they plan to incorporate.
The purchasers in an asset acquisition will generally notbe held liable for undisclosed
liabilities and obligations of the target corporation stemming from prior transactions.
The partnership agreement may require each partner to contribute additional capital to
the partnership as needed for the continuance of the partnership business.
The Securities and Exchange Commission is headed by 12 elected officials, known as
commissioners.
In states following the Model Business Corporation Act, the shareholders of a
corporation need notapprove the restatement of the articles of incorporation if no
amendment to provisions of the articles is included.
A securities offering to a limited number of shareholders may be exempt from the
registra- tion provisions of the Securities Act of
The withdrawal of a general partner is considered to be a cause for dissolution of the
limited partnership.
Filing articles of organization authorizes a limited liability company to transact business
in every jurisdiction in the United States.