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BUS1010 BUSINESS ORGANIZATIONS TEST QUESTIONS WITH VERIFIED SOLUTIONS; GUARANTEED TO PASS 100%
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BUS1010 BUSINESS ORGANIZATIONS TESTQUESTIONS WITH VERIFIED SOLUTIONS
Shareholers can be held liable for:
a) illegal acts of the corporation
b) ultra vires acts of the corporation
c) full payment for watered stock received
d) fraud committed by the board of directors - 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. - D
A corporation is created:
a) by agreement of the parties.
b) by franchise.
c) by expanding business interests.
d) by statutory authorizations. - 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. - 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. - 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. - 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 - T
Partnerships must be formed by written agreements and in strict compliance with the partnership
statutes of a particular state. - F
A corporation cannot be a domestic corporation and a foreign corporation at the same time. - F
A debenture is a corporate obligation secured by a lien or by a mortgage on specific corporate property.
-F
A corporation may be incorporated in more than one state. - 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. - 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 - 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 - 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. - B
Stock splits and stock dividends achieve the same result in relation to the transfer of earnings to capital?
-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. - T
Each partner in a general partnership is an agent of the partnership for purposes of conducting
partnership business. - T
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