Question 1

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with

Accepted Answer

The board of directors is responsible for the overall management of the corporation, including making major decisions and overseeing the work of the officers. While the officers are responsible for day-to-day operations, the ultimate authority and responsibility lie with the board of directors, who are elected by the shareholders to represent their interests. The shareholders, while important, do not have direct responsibility for management.

Question 2

A business that holds itself out as being a corporation may not be able to deny corporate status, even if it makes no attempt to incorporate.

Accepted Answer

This is known as the doctrine of corporate by estoppel, which prevents a business from denying its corporate status if it has held itself out as a corporation to others who have relied on that representation.

Question 3

A state constitution may resolve a conflict among documents involving a corporation.

Accepted Answer

State constitutions have the power to resolve conflicts with other documents, including those related to corporations.

Question 4

Bylaws are the internal rules of management for a corporation.

Accepted Answer

Bylaws are indeed the internal rules of management for a corporation. They typically outline things like the roles and responsibilities of board members, voting procedures, and procedures for making amendments to the bylaws themselves.

Question 5

Bonds represent the borrowing of funds by firms.

Accepted Answer

Bonds are a common way for firms to borrow funds from investors. When a firm issues a bond, they are essentially borrowing money from investors in exchange for promising to pay periodic interest payments and return the principal investment at the end of the bond's term.

Question 6

Skyla and Terry want to form and do business as Unique Boutique Corporation. Its existence depends generally on

Accepted Answer

The formation and business operations of corporations are generally governed by state law, including the filing of articles of incorporation and adherence to state corporate statutes. Therefore, the existence of Unique Boutique Corporation would depend on state law.

Question 7

A corporation has perpetual existence in most states unless the ar?ti?cles of incorporation state otherwise.

Accepted Answer

Perpetual existence means that a corporation can continue to operate indefinitely, unless specified otherwise in the articles of incorporation.

Question 8

Erin is a shareholder in African Adventures. As a shareholder, Erin

Accepted Answer

As a shareholder, Erin owns shares of stock in African Adventures. Shareholders are owners of a corporation and have the right to vote in the election of the board of directors and receive dividends from the corporation. However, shareholders are not personally liable for the debts of the corporation.

Question 9

The date when the principal of a bond is returned to the investor is called the maturity date.

Accepted Answer

The statement is true.

Question 10

A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.

Accepted Answer

This is a generally accepted principle of corporate law. However, the extent and limitations of this power can vary depending on the specific legal and contractual agreements in place, as well as other laws and regulations that may apply.

Question 11

A de jure corporation is one that is not properly formed.

Accepted Answer

A de jure corporation is one that is properly formed in accordance with state law.

Question 12

The purpose of a corporation may be specified in its articles of incorporation.

Accepted Answer

The articles of incorporation outline the purpose and structure of a corporation, including its mission statement and goals. The purpose of a corporation can be legally specified in this document.

Question 13

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

Accepted Answer

Preferred stockholders have priority over common stockholders in terms of payment on the corporation's dissolution. This means that they will receive their payments before any payments are made to holders of common stock.

Question 14

The registered agent is the person who can receive legal punishment (such as fines and imprisonment) on behalf of the corporation.

Accepted Answer

The answer of The registered agent is the person who...

Question 15

The articles of incorporation serve as a primary source of authority for the corporation's future organization and business functions.

Accepted Answer

The articles of incorporation are important legal documents that outline the purpose, structure, and regulations of a corporation. They serve as a primary source of authority for the corporation's future organization and business functions.

Question 16

George is the founder of Excellent Exotics Corporation. Wilson is a shareholder and director and Bill is an officer. The daily business operations of Excellent Exotics are overseen by

Accepted Answer

As an officer, Bill is responsible for the daily business operations of Excellent Exotics. While George is the founder, he may not be involved in the day-to-day operations, and Wilson's role as a director may be more focused on long-term strategy and oversight rather than daily operations.

Question 17

Express powers of a corporation can be found in the articles of incorporation.

Accepted Answer

The articles of incorporation outline the purpose, structure, and powers of a corporation, including its express powers.

Question 18

In the absence of express constitutional, statutory, or other provisions, the corporation has no implied powers.

Accepted Answer

In the absence of express constitutional, statutory, or other provisions, the corporation has implied powers.

Question 19

Pola and Quincey want to form and do business as River Tours Corporation. A corporation can consist of

Accepted Answer

A corporation must be made up of at least one natural person, but can be comprised of multiple natural persons. Option A and B are incorrect as they limit the number of natural persons in a corporation. Option D is incorrect as it states that only more than one natural person can form a corporation, which is not true as a corporation can also be formed by a single natural person.

Question 20

A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation.

Accepted Answer

A court may pierce the corporate veil of a corporation that is formed to evade an existing legal obligation in order to hold the individuals behind the corporation personally liable for the obligation.

Quiz 34: Corporate Formation and Financing