Question 1

Payments to shareholders representing their share of corporate profits are called

Accepted Answer

Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Question 2

Charitable associations often create_______ to conduct business without exposing the individual owners to personal liability.

Accepted Answer

Charitable associations often create nonprofit corporations to conduct business while protecting individual owners from personal liability. Nonprofit corporations are designed specifically for organizations that operate for charitable, educational, religious, scientific, or other purposes that do not seek to generate profit for their owners.

Question 3

Which of the following is a corporation whose shares are eligible to be publicly traded in securities markets, such as the New York Stock Exchange?

Accepted Answer

Publicly held corporations are those whose shares are available for trading on public securities markets, allowing a wide range of investors to buy and sell their shares.

Question 4

Certain close corporations are permitted to elect a special corporate tax status under Subchapter S of the Internal Revenue Code. These corporations are called which of the following?

Accepted Answer

S corporations are the type of corporations that can elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes under Subchapter S of the Internal Revenue Code.

Question 5

A director's responsibilities to a corporation do not include which of the following?

Accepted Answer

Choosing the corporation's name is typically not a responsibility of a director. This decision is usually made by the founders or shareholders at the time of incorporation or through a specific process outlined in the corporation's bylaws or articles of incorporation, not by the board of directors. Directors are more involved in overseeing the corporation's management, making significant policy decisions, appointing officers, and, in some cases, declaring dividends.

Question 6

Phyllis is a director for CattleBreeders, Inc. Phyllis has the right to

Accepted Answer

As a director of a corporation, Phyllis has the right to participate in board meetings and inspect corporate books to fulfill her duties and responsibilities effectively.

Question 7

The classification of a corporation depends on its

Accepted Answer

The classification of a corporation can indeed depend on its purpose (e.g., non-profit vs. for-profit), ownership (e.g., publicly traded vs. privately held), and location (e.g., domestic vs. foreign in relation to the country of incorporation). Therefore, all of these factors are relevant in classifying a corporation.

Question 8

Paralegal Margaret is assigned to find out if client John can name his new corporation John's Jams. Margaret should

Accepted Answer

When setting up a new corporation, it's important to ensure the chosen name is available for use and does not infringe on existing trademarks. Additionally, securing a relevant domain name for online presence is crucial in today's digital age. Therefore, all the listed actions are appropriate steps in the process.

Question 9

The _________is the document filed with the appropriate state official when a business is
Incorporated.

Accepted Answer

The Articles of Incorporation is the document filed with the appropriate state official, typically the Secretary of State, when a business decides to incorporate. This document outlines the primary details of the corporation, such as its name, purpose, and structure.

Question 10

The document issued by a state official or agency granting a corporation legal existence is called

Accepted Answer

A certificate of incorporation and a corporate charter are both documents issued by a state official or agency that grant a corporation its legal existence. These terms are often used interchangeably to refer to the official document that establishes a corporation's existence under the law.

Question 11

A _______corporation is a corporation owned by a small group of shareholders, often family members. Its shares cannot be publicly traded on the stock market, and often other restrictions on stock transfer apply.

Accepted Answer

A closely held corporation is characterized by a small number of shareholders, typically involving family members, where the shares are not available for public trading and often have restrictions on stock transfer.

Question 12

Which of the following is something a paralegal might do?

Accepted Answer

Paralegals are trained to assist attorneys in various tasks, including litigation support, helping with the dissolution of partnerships or corporations, and preparing or reviewing documents related to the sale of corporate securities. Their role is to provide comprehensive support in various legal processes under the supervision of an attorney.

Question 13

Ryan wants to purchase some corporate stock. He prefers to have greater voting rights, rather than greater rights to receive dividends or payments if the company liquidates. Ryan should purchase which of the following?

Accepted Answer

Common stock typically provides shareholders with voting rights, allowing them to influence corporate decisions, which aligns with Ryan's preference for greater voting rights.

Question 14

Which of the following refers to the set of rules that a corporation adopts at its first organizational meeting to govern the management of the corporation?

Accepted Answer

Bylaws are the set of rules adopted by a corporation at its first organizational meeting to govern the management of the corporation. These rules outline the corporation's operational procedures, including the process for electing directors, conducting meetings, and other corporate governance matters.

Question 15

A director's responsibilities to a corporation include which of the following?

Accepted Answer

The board of directors is responsible for the overall management of the corporation, including declaring and paying dividends, appointing officers, and making significant policy decisions.

Question 16

Jacob wants to purchase some corporate stock. He prefers to have greater rights to receive dividends or payments if the company liquidates, rather than greater voting rights. Jacob should purchase which of the following?

Accepted Answer

Preferred stock typically offers greater rights to dividends and priority over common stock in the event of liquidation, but usually comes with limited or no voting rights, aligning with Jacob's preferences.

Question 17

Which of the following is an example of a professional who might incorporate as part of a professional corporation?

Accepted Answer

Lawyers, doctors, and accountants often incorporate as part of a professional corporation to gain legal and financial benefits while still adhering to their profession's regulatory body.

Question 18

Which of the following is not something a paralegal might do?

Accepted Answer

Paralegals can perform all the tasks listed (A, B, and C) as part of their duties under the supervision of an attorney, so none of the choices is an example of something a paralegal might not do.

Question 19

John Smith, Mary Barney, and Tom Reed work for a law firm called Smith, Barney, and Reed, P.C. Which of the following business entities have they formed?

Accepted Answer

The name "Smith, Barney, and Reed, P.C." indicates that they have formed a professional corporation, as "P.C." stands for "professional corporation."

Question 20

A privately owned corporation is called a _______corporation.

Accepted Answer

The answer of A privately owned corporation is called a...

Quiz 18: Business Organizations and Employment Law