Question 1

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is

Accepted Answer

A)   ​a publicly held corporation.
B)   ​a public corporation.
C)   ​a private corporation.
D)   ​not a corporation.E) A) and B)
F) C) and D)

Question 2

Selecting the state in which to incorporate is an important step in the incorporation procedure.

Accepted Answer

A) True 
 B)False

Question 3

If a corporation has S corporation status, it must pay income taxes at the corporate level.

Accepted Answer

A) True 
 B)False

Question 4

Blair and Chanel are holders of common stock in Discount Retail Stores, Inc. Like other holders of common stock, they have a residual position in the overall financial structure of Discount Retail, because they

Accepted Answer

A)   ​are guaranteed to receive more than the amount of their investment.
B)   ​are the last to receive returns for their investment.
C)   ​have priority to the firm's assets if it becomes insolvent.
D)   ​reside in the state of the firm's incorporation.E) None of the above
F) A) and B)

Question 5

A court will not pierce the corporate veil of a corporation simply because it is too thinly capitalized.

Accepted Answer

A) True 
 B)False  False

Question 6

Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form

Accepted Answer

A)   ​an alien corporation.
B)   ​a close corporation.
C)   ​an S corporation.
D)   ​a private corporation.E) All of the above
F) A) and B)

Question 7

Venture capital is capital provided to new business ventures by professional, outside investors.

Accepted Answer

A) True 
 B)False

Question 8

Sierra is a holder of preferred stock in Rio Grande Irrigation, Inc. Sierra has priority over holders of Rio common stock as to

Accepted Answer

A)   ​nothing.
B)   ​payments of dividends.
C)   ​the date on which Rio must repurchase the shares.
D)   ​upward changes in the market price of the shares.E) All of the above
F) None of the above B

Question 9

One of the key advantages of the corporate form is the unlimited liability of its owners.

Accepted Answer

A) True 
 B)False

Question 10

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely

Accepted Answer

A)   ​a corporation by estoppel.
B)   ​a de facto corporation.
C)   ​a de jure corporation.
D)   ​a benefit corporation.E) A) and B)
F) A) and C) A

Question 11

Integrated Devices, Inc., is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Integrated is

Accepted Answer

A)   ​an S corporation.
B)   a close corporation.
C)   ​a nonprofit corporation.
D)   ​none of the choices.E) None of the above
F) B) and C)

Question 12

A firm named Biometric Research makes an attempt to incorporate for a purpose other than making a profit. Biometric is

Accepted Answer

A)   ​a foreign corporation.
B)   ​an alien corporation.
C)   ​a nonprofit corporation.
D)   ​not a corporation.E) A) and B)
F) A) and C)

Question 13

Owen is a registered agent for Pods & Phones, Inc., which incorporated in California. As a registered agent, Owen​

Accepted Answer

A)   ​agreed to sell stock in the firm before it existed.
B)   ​applied to California on the firm's behalf to obtain its corporate charter.
C)   ​represents the firm as a marketing agent.
D)   ​receives legal documents on behalf of the firm.E) A) and B)
F) C) and D)

Question 14

Ned and Olsen want to form and do business as a corporation-Pastries & Pies Inc. Its existence depends generally on

Accepted Answer

A)   ​city or county corporate codes.
B)   ​the Entrepreneur's Corporate Handbook.
C)   ​the federal Administrative Procedure Act.
D)   ​state law.E) C) and D)
F) A) and D)

Question 15

A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.

Accepted Answer

A) True 
 B)False

Question 16

Burgers & Brews, Inc., files its articles of incorporation with the appropriate government agency. Not likely to appear in the articles is the name of

Accepted Answer

A)   ​each incorporator.
B)   ​each shareholder.
C)   ​the corporation.
D)   ​a registered agent.E) None of the above
F) All of the above

Question 17

The abbreviation "P.A." in the name "Conrad & Drake, Accountants, P.A." means that this organization is

Accepted Answer

A)   ​a private association.
B)   ​a professional association.
C)   ​a public association.
D)   ​a publicly administered corporation.E) None of the above
F) C) and D)

Question 18

Pro Audio, Inc., would like to change its corporate status to that of an S corporation. To qualify, Pro Audio must​

Accepted Answer

A)   ​be a domestic corporation.
B)   ​have more than one hundred shareholders.
C)   ​be a benefit corporation.
D)   ​all of the choices.E) A) and B)
F) A) and C)

Question 19

Vince buys 500 shares of common stock in Water Services, Inc. As a shareholder of record, Vince owns a proportionate interest with regard to Water's

Accepted Answer

A)   ​net assets.
B)   ​control.
C)   ​earnings.
D)   ​all of the choices.E) B) and C)
F) All of the above

Question 20

The purpose of a corporation may not be specified in its articles of incorporation.

Accepted Answer

A) True 
 B)False

Exam 5: Corporate Formation and Financing

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is

Correct AnswerverifiedShow Answer

Selecting the state in which to incorporate is an important step in the incorporation procedure.

Correct AnswerverifiedShow Answer

If a corporation has S corporation status, it must pay income taxes at the corporate level.

Correct AnswerverifiedShow Answer

Blair and Chanel are holders of common stock in Discount Retail Stores, Inc. Like other holders of common stock, they have a residual position in the overall financial structure of Discount Retail, because they

Correct AnswerverifiedShow Answer

A court will not pierce the corporate veil of a corporation simply because it is too thinly capitalized.

Correct AnswerverifiedFalse

Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form

Correct AnswerverifiedShow Answer

Venture capital is capital provided to new business ventures by professional, outside investors.

Correct AnswerverifiedShow Answer

Sierra is a holder of preferred stock in Rio Grande Irrigation, Inc. Sierra has priority over holders of Rio common stock as to

Correct AnswerverifiedB

One of the key advantages of the corporate form is the unlimited liability of its owners.

Correct AnswerverifiedShow Answer

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely

Correct AnswerverifiedA

Integrated Devices, Inc., is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Integrated is

Correct AnswerverifiedShow Answer

A firm named Biometric Research makes an attempt to incorporate for a purpose other than making a profit. Biometric is

Correct AnswerverifiedShow Answer

Owen is a registered agent for Pods & Phones, Inc., which incorporated in California. As a registered agent, Owen​

Correct AnswerverifiedShow Answer

Ned and Olsen want to form and do business as a corporation-Pastries & Pies Inc. Its existence depends generally on

Correct AnswerverifiedShow Answer

A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.

Correct AnswerverifiedShow Answer

Burgers & Brews, Inc., files its articles of incorporation with the appropriate government agency. Not likely to appear in the articles is the name of

Correct AnswerverifiedShow Answer

The abbreviation "P.A." in the name "Conrad & Drake, Accountants, P.A." means that this organization is

Correct AnswerverifiedShow Answer

Pro Audio, Inc., would like to change its corporate status to that of an S corporation. To qualify, Pro Audio must​

Correct AnswerverifiedShow Answer

Vince buys 500 shares of common stock in Water Services, Inc. As a shareholder of record, Vince owns a proportionate interest with regard to Water's

Correct AnswerverifiedShow Answer

The purpose of a corporation may not be specified in its articles of incorporation.

Correct AnswerverifiedShow Answer

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False

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B

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A

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Owen is a registered agent for Pods & Phones, Inc., which incorporated in California. As a registered agent, Owen

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Pro Audio, Inc., would like to change its corporate status to that of an S corporation. To qualify, Pro Audio must

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