Question 1 Which of the following is TRUE regarding a corporation?

a. it is authorized by statute

b. it is managed by the federal government

c. it is created and recognized by international treaties

d. it is created by local city ordinance


Question 2 The responsibility for the overall management of a corporation belongs to:

a. shareholders

b. the board of directors

c. the chief executive officer

d. the chief financial officer


Question 3 In simple terms, a Subchapter S-corporation:

a. composed entirely of licensed professionals

b. whose shareholders are taxed like shareholders but have full liability

c. whose shareholders have limited liability and avoid paying corporate taxes.

d. regulated by the securities authorities

Question 4 Articles of incorporation contain:

a. the minutes of meetings of the board of directors

b. information about a corporation, including its organization and functions

c. resolutions of the board of directors

d. list of officers of the corporation


Question 5 Stock may be described as:

a. a document describing the ownership and management structure of a corporation

b. an ownership interest in a corporation

c. a debt owed by a corporation to a shareholder

d. a debt owed by the government to a shareholder

Question 6 If Companies A and B join and become Company C, the legal process that has taken place is called:

a. an appraisal

b. a consolidation

c. an acquisition

d. a merger


Question 7 Peggy incorporates her business in her home state of Delaware. If she wants to expand to Texas, under Texas law her company is considered to be:

a. a foreign corporation

b. an open corporation

c. a public corporation

d. an alien corporation

Question 8 Travis buys 250 shares of common stock in Toyz for U-n-Me. As a shareholder, he acquires rights to:

a. determine the amount of dividends to be paid

b. receive a fixed sum on a fixed date

c. receive dividends before creditors are paid

d. vote


Question 9 Sugar Corporation wishes to purchase all of the Spice Corporation’s bakery equipment worth several million dollars. Who has to approve the purchase?

a. shareholders

b. employees

c. the corporation’s bank

d. the board of directors

Question 10 The by-laws of a corporation include which of the following?

a. the names of the original incorporators

b. when and where annual shareholders meetings are held

c. the amount of common stock initially issued by the corporation

d. the names of the original board of directors