Business Organizations Test Questions and Answers 2022./2023 Rated A.

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Business Organizations Test Questions and Answers 2022 Shareholers can be held liable for: a) illegal acts of the corporation b) ultra vires acts of the corporation c) full payment for watered sto... ck received d) fraud committed by the board of directors -Answer- C Brittany, a CPA, sits on the board of directors of three corporations. Brittany: a) has violated her duty of loyalty to each of the corporations. b) has violated the Sherman Act. c) has not violated her duty of loyalty if she refrains from voting on issues that concern more than one of the corporations. d) has not violated her duty of loyalty if the corporations do not complete directly with each other. -Answer- D A corporation is created: a) by agreement of the parties. b) by franchise. c) by expanding business interests. d) by statutory authorizations. -Answer- D Stock warrants are used to implement: a) cumulative voting. b) the preemptive right. c) access to corporate stock records. d) dissolution of the corporation. -Answer- B The "business judgment rule": a) applies to action of the directors. b) protects directors from all liability. c) makes directors liable for errors in business judgment. d) makes officers liable for errors in business judgment. -Answer- A Tim owns 100 shares of ABC Corporations. The corporation makes a new issue of 10,000 shares. According to his share certificate, Tim is entitled to purchase an additional 100 shares at the time of the new issue. This is an example of: a) right of first refusal b) shareholder restrictions on transfer and ownership. c) preemptive rights. d) participation rights. -Answer- C A share of stock with a stated par value of $10, which is sold and issued initially for $8, is an example of watered stock -Answer- TPartnerships must be formed by written agreements and in strict compliance with the partnership statutes of a particular state. -Answer- F A corporation cannot be a domestic corporation and a foreign corporation at the same time. -Answer- F A debenture is a corporate obligation secured by a lien or by a mortgage on specific corporate property. -Answer- F A corporation may be incorporated in more than one state. -Answer- T A de facto corporation is one that: a) has compiled with statutory rules and exists in fact. b) is used by its shareholders as a conduit for personal activities. c) has not complied with statutory rules but operates as a corporation. d) is used by its shareholders to defraud creditors. -Answer- C If a limited partner were to particiate in the operations of the partnership in any way, a) the limited partnership would be treated as a general partnership except for taxing purposes. b) the limited partner would become jointly and severally liable, along with the general partner, for all partnership debt. c) the partnership would be dissolved. d) none of the above -Answer- B Each of the partners in a general partnership: a) has no personal tax liability for partnership income; it is the liability of the partnership. b) bears equal personal liability for tax on partnership income. c) bears personal tax liability in proportion to the partnership income received by him or her. d) None of the above -Answer- C The Uniform Partnership Act was formulated by the: a) American Law Institute b) National Conference of Commissioners on Uniform State Laws. c) National Association of Partnerships d) American Bar Association. -Answer- B Stock splits and stock dividends achieve the same result in relation to the transfer of earnings to capital? -Answer- F For the purposes of federal litigation, a corporation is deemed to be a citizen of the state where it has its principal place of business as well as of the state where it is incorporated. -Answer- TEach partner in a general partnership is an agent of the partnership for purposes of conducting partnership business. -Answer- T Corporations cannot be found guilty of criminal acts, because corporations cannot be sentenced to prison terms. -Answer- F A corporation must transact all or most of its business in a state where it is incorporated. -Answer- F A partnership generally is treated as an aggregate for purposes of taxation and as a separate entity for purposes of litigation. -Answer- T A domestic corporation is: a) corporation whose officers reside in the state where the corporation transacts business. b) a corporation whose principal place of business is in the forum state c) a corporation whose principal activities related to family services d) a corporation chartered in the forum state. -Answer- D A foreign corporation: a) is chartered in a foreign country, such as Canada. b) is a synonym for the term "alien corporation." c) may require a certificate of authority to do business in states where it is not chartered. d) may transact business only foreign states. -Answer- c If the organizers of a small corporation anticipate losses during the first two to three years of operations, which of the following options will provide the best tax treatment for shareholders in the usual situation. a) Chapter S election b) Section 1244 stock c) Nonprofit status d) Leverage financing -Answer- A Rachel and Cori form a partnership. Rachel contributes $75k to the partnership, and Cori contributes $25k. At the end of the first year, the business realizes a profit of $10k. Since no agreement concerning distribution of profits was made, how much will each receive? a) Rachel will receive $7.5k; Cori $2.5k b) Each will receive $5k. c) Rachel will receive $3.75k; Cori, $1.75k d) None is correct. -Answer- B Which of the following is not among the duties of a director? a) Declare dividends b) elect officers c) Issue Stockd) Sign contracts on behalf of the corporation -Answer- D An advantage of incorporation is: a) Perpetual existence b) Limited liability c) Corporations are separate taxing entities d) All of the above e) None of the above -Answer- D Under the Revised Uniform Limited Partnership Act, a limited partner may not: a) vote on partnership matters such as dissolution. b) serve as an employee of the limited partnership. c) act as a surety for the limited partnership. d) supervise employees of the limited partnership. -Answer- D A public corporation is: a) one whose stock is traded publicly. b) one created by government to administer government purposes. c) act as a surety for the limited partnership. d) supervise employees of the limited partnership. -Answer- B For which of the following acts is a director most likely to be found personally liable? a) Investment of corporation funds in a venture that loses money. b) failure to supervise the president's actions c) Creation of a new product line that is unsuccessful. d) Breach of warranty for a faulty product made by the corporation. -Answer- B Cumulative voting is a term that applies in which of the following situations? a) Voluntary dissolution of a corporation b) Election of Shareholders c) Election of Directors d) Election of Officers -Answer- C The "business judgment rule": a) applies to action of the directors b) protects directors from all liability c) makes directors liable for errors in business judgment d) makes officers liable for errors in business judgment -Answer- A Which of the following business entities typically provides the most flexibility in terms of management policy? a) Sole proprietorship b) Partnership c) Limited partnership d) Corporation -Answer- AHolders of fractional share of stock and holders of scrip certificates generally enjoy the same voting rights within the corporate structures -Answer- F A partnership may be a shareholder in an "S" corporation. -Answer- F A director is always an agent of the corporation. -Answer- F Corporate directors and officers generally owe no direct duty to individual shareholders of the corporation. -Answer- T Which of the following classes of stock is never granted voting rights? a) Common Stock b) Preferred Stock c) Treasury Stock d) Watered Stock -Answer- C The right of a shareholder to force the corporation to buy his or her stock following a merger is called: a) repurchase rights b) appraisal rights c) preemptive rights d) preferred rights -Answer- B The duration of a corporation may be: a) dissolved upon death of the parties. b) perpetual c) subject to liability d) terminated by a lawsuit -Answer- B A shareholder derivative action may be initiated in response to: a) negligence by management that injures a shareholder. b) management's election to dissolve the corporation c) a strike suit filed by management that injures the corporation d) negligence by management that injures the corporation -Answer- D A corporation sometimes is treated as a person within the meaning of the federal Constitution. -Answer- T A corporation may be subjected to criminal charges -Answer- T A close corporation may restrict the rights of shareholders to transfer stock by means of shareholder agreements. -Answer- T Maria and Lilly form a partnership. If Maria sells her partnership interest to Allen, Allen will receive all of the benefits and burdens of partnership status when the sale is consummated. -Answer- FWhich of the following actions by shareholders requires more than a majority vote? a) Election of directors b) Election of directors by cumulative voting. c) Resolution to merge with another corporation d) Resolution to amend the date of the annual meeting. -Answer- C Each of the partners in a general partnership: a) has joint liability for all partnership debt b) has joint and several liability for all partnership debt c) is liable for partnership debt in proportion to his or her capital d) [Show More]

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