Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

Accepted Answer

A) True 
 B)False

Question 3

If the procedures for incorporation are not followed precisely, others may be able to challenge the existence of the corporation.

Accepted Answer

A) True 
 B)False

Question 4

To help small businesses raise capital, the Securities and Exchange Commission allows the companies to advertise investment opportunities to the public. This most likely encourages

Accepted Answer

A)   venture capitalizing.
B)   crowdfunding.
C)   piercing the corporate veil.
D)   private equity capitalizing.E) None of the above
F) A) and C)

Question 5

A corporation is recognized under U.S. law as a person.

Accepted Answer

A) True 
 B)False

Question 6

Pipe Inc.'s stated purpose is to install plumbing. Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work. This is most likely

Accepted Answer

A)   an ultra vires act.
B)   within the corporation's express powers.
C)   within the corporation's implied powers.
D)   allowable and proper as an act to profit corporate shareholders.E) None of the above
F) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The primary document needed to incorporate a business is the articles of incorporation-the primary source of authority for the firm's organization and functions.

Accepted Answer

A) True 
 B)False

Question 9

Any corporation whose shares are publicly traded in securities markets is

Accepted Answer

A)   a benefit corporation.
B)   a private corporation.
C)   a public corporation.
D)   a publicly held corporation.E) A) and D)
F) C) and D)

Question 10

In many states, close corporations have more flexibility in determining their rules of operation.

Accepted Answer

A) True 
 B)False

Question 11

Corporate shareholders will most likely be held personally liable for the firm's debts if they

Accepted Answer

A)   insist on separating their personal interests from those of the firm.
B)   refuse to transfer their shares to dilute control of the firm.
C)   encourage the firm to unsuccessfully enter a new market.
D)   use the firm to perpetrate a fraud.E) B) and C)
F) A) and B)

Question 12

Shareholders' assumption of personal liability, as guarantors, for the obligations of a corporation can enable the firm to obtain credit.

Accepted Answer

A) True 
 B)False

Exam 33: Corporate Formation and Financing

The primary document needed to incorporate a business is the articles of incorporation-the primary source of authority for the firm's organization and functions.

Correct Answer
verified

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

Correct Answer
verified

Shareholders' assumption of personal liability, as guarantors, for the obligations of a corporation can enable the firm to obtain credit.

Correct Answer
verified

To help small businesses raise capital, the Securities and Exchange Commission allows the companies to advertise investment opportunities to the public. This most likely encourages

Correct Answer
verified

Any corporation whose shares are publicly traded in securities markets is

Correct Answer
verified

A corporation is recognized under U.S. law as a person.

Correct Answer
verified

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.

Correct Answer
verified

In many states, close corporations have more flexibility in determining their rules of operation.

Correct Answer
verified

If the procedures for incorporation are not followed precisely, others may be able to challenge the existence of the corporation.

Correct Answer
verified

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

Correct Answer
verified

Pipe Inc.'s stated purpose is to install plumbing. Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work. This is most likely

Correct Answer
verified

Corporate shareholders will most likely be held personally liable for the firm's debts if they

Correct Answer
verified

Exam 33: Corporate Formation and Financing

The primary document needed to incorporate a business is the articles of incorporation-the primary source of authority for the firm's organization and functions.

Correct AnswerverifiedShow Answer

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

Correct AnswerverifiedShow Answer

Shareholders' assumption of personal liability, as guarantors, for the obligations of a corporation can enable the firm to obtain credit.

Correct AnswerverifiedShow Answer

To help small businesses raise capital, the Securities and Exchange Commission allows the companies to advertise investment opportunities to the public. This most likely encourages

Correct AnswerverifiedShow Answer

Any corporation whose shares are publicly traded in securities markets is

Correct AnswerverifiedShow Answer

A corporation is recognized under U.S. law as a person.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

In many states, close corporations have more flexibility in determining their rules of operation.

Correct AnswerverifiedShow Answer

If the procedures for incorporation are not followed precisely, others may be able to challenge the existence of the corporation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Pipe Inc.'s stated purpose is to install plumbing. Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work. This is most likely

Correct AnswerverifiedShow Answer

Corporate shareholders will most likely be held personally liable for the firm's debts if they

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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