Reference no: EM132804885

QUESTION 1

The document that is submitted to the state where a corporation is to be formed that identifies the name of the corporation, the powers of the corporation, and the people involved in creating the corporation is the:

by-laws.

certificate of incorporation.

articles of incorporation.

subscription agreement.

QUESTION 2

With respect to the formation of a corporation, a subscriber is:

a person who has purchased stock in a newly formed corporation.

a person who has offered to purchase a specific number of shares in a corporation that is to be formed.

a person who has expressed an interest in purchasing stock in a corporation that is to be formed but who has not committed to the number of shares to be purchased.

a person who begins the process of forming a new corporation.

QUESTION 3

What does it mean that a corporation is a separate legal entity?

The corporation is owned by people who are known as shareholders.

The corporation has to have an address for the business it operates that is different than the addresses of the people who own the corporation.

The corporation has to be managed by people who are not shareholders in the corporation.

The corporation is considered to be a legal person with certain rights that exists independently of the people who own stock in the corporation.

QUESTION 4

If an employee of a corporation, while carrying out the duties of their job, does something that causes injury or damage to a third party, the corporation will be liable for those injuries or damage under the doctrine of:

unlimited liability.

centralized management.

respondeat superior.

ultra vires.

QUESTION 5

Dividends paid to shareholders by corporations are paid from profits of the corporation after the corporation has paid income taxes on those profits. When a shareholder receives a dividend, that dividend is taxable income to that shareholder. These income tax consequences are known as:

dividend taxation.

corporate taxation.

double taxation.

retained earnings taxation.

QUESTION 6

Shareholders in a corporation elect __________ who are responsible for the overall management of the corporation.

officers

promoters

directors

incorporators

QUESTION 7

A corporation that meets specific conditions and that is taxed like a partnership is a(n):

nonprofit corporation.

closely held corporation.

subchapter S corporation.

professional corporation.

QUESTION 8

A bond is:

an ownership interest in a corporation that gives the owner preferences with respect to the assets of the corporations and dividends paid by the corporation.

a debt instrument that allows the holder to convert the debt into a number of shares in the corporation having a value equal to the amount of the bond.

a debt instrument that requires the corporation to pay the holder a stated amount of interest for a stated period of time and then to pay the holder the amount of the bond.

an ownership interest in the corporation that allows the holder to vote in corporate elections.

QUESTION 9

Shares of stock in a corporation that is issued to a shareholder for less than the market value of the stock is:

watered stock.

no-par stock.

par-value stock.

a stock warrant.

QUESTION 10

A corporation that has been properly formed is called a(n):

de facto corporation.

ultra vires corporation.

subchapter s corporation.

de jure corporation.

QUESTION 11

What is the difference between a de jure corporation and a de facto corporation, and what is necessary to form each?

QUESTION 12

One of the negative aspects of the corporate form of doing business is double taxation, which occurs when a corporation pays dividends to shareholders from profits that have already been taxed and the dividends, when received by shareholders, are taxed again. How does the use of a subchapter S corporation address the issue of double taxation?