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Exam 18: Corporations

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Question 1

True/False

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When it comes to managing a corporation,the corporation relies on its board of directors and officers.

A) True
B) False

Correct Answer

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Question 2

Multiple Choice

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Ned and Olga are shareholders of Pizza Pies Inc.Ned's written authorization to Olga to vote Ned's shares at a shareholders' meeting is

A) a fundamental change.
B) a cumulative vote.
C) a proxy.
D) a quorum requirement.

E) B) and D)
F) B) and C)

Correct Answer

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C

Question 3

True/False

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Directors and officers whose failure to exercise due care results in harm to the corporation or the shareholders can be held liable for negligence unless the business judgment rule applies.

Doris wants to form a new firm-eBeats-to market a new app.Fees are required to form all of the following business organizations except

Issuing securities is the only way for a new corporation to raise capital.

When a shareholder commingles personal and corporate interests so that the firm has no separate identity,the shareholder may be held liable for the firm's debts.

A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal,even though the firm is not yet formed,because the nature of investment is risk.

Kathy is a director of Line Production Inc.As a director,with respect to the corporation,Kathy is expected to subordinate

Nevis and Olsen want to do business as a corporation-Pastries & Pies Inc.The procedure for forming this firm is prescribed by

Corporate bylaws and resolutions of the corporation's board of directors provide guidelines but cannot grant or restrict corporate powers.

Like the partners in a partnership,the shareholders in a corporation cannot change without affecting the continued existence of the firm.

When directors and officers do not act in the best interests of their corporations,the shareholders may sue them on the company's behalf.

Because state corporate laws differ,persons wishing to incorporate may look for the state that offers the most advantageous tax or other provisions.

A shareholder in a professional corporation generally cannot be held liable for torts committed by other professionals at the firm,including malpractice and breaches of duty to the firms' clients.

Ruiz owns Solar Corporation.Ruiz commingles his personal interests with the corporation's interest to the extent that the firm has no separate identity.This most likely warrants

Shareholders exercise ownership control through the power of their votes.

Buck is a director on the board of Construction Corporation.The board delegates work to Don,Construction's president,and other corporate officers.Buck fails to reasonably supervise the work.He is most likely liable for

Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation.Welding undertakes business as a corporation.In this circumstance,the firm's existence may be challenged by

Guy is a director of Healthcare Corporation.Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes.His best defense against liability for these mistakes is

Gil is an officer for HVAC Corporation.Due to Gil's choice of a certain supplier,HVAC's costs are somewhat higher than they might have been if a different supplier had been chosen.Gil is most likely liable for breach of