Question 1

Sullivan and Taylor want to form a corporation to provide catering services.The first step in the incorporation procedure is to

Accepted Answer

The answer of Sullivan and Taylor want to form a...

Question 2

Omega Corporation makes and markets digital timers,clocks,and related products.Like other business corpoations,Omega issues securities to

Accepted Answer

Omega Corporation issues securities in order to obtain financing.

Question 3

Gelato Ice,Inc. ,is incorporated in the state of New Jersey and is doing business in the state of New York.In New York,Gelato is properly referred to as

Accepted Answer

Gelato Ice, Inc. is incorporated in the state of New Jersey and is doing business in the state of New York. Therefore, in New York, it would be considered a foreign corporation.

Question 4

A merger between Grain Mills Corporation and Farm2Fork Distribution Inc.can be expressed as Grain Mills + Farm2Fork =

Accepted Answer

The question is asking for a merger between Grain Mills Corporation and Farm2Fork Distribution Inc. Therefore, the correct answer is A, which simply states the combination of the two companies. Harvest Dining Corporation and EZ Brewing Company are not mentioned in the question and are therefore not the correct choices.

Question 5

Fact Pattern 24-2 
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors.
-Refer to Fact Pattern 24-2.Later,Bertram dies.With respect to the stock transfer restriction agreement,Bertram's death most likely

Accepted Answer

The fact pattern states that the agreement contains a provision for the division of the shares upon the death of a shareholder. Therefore, Bertram's death would trigger this provision and the shares would be divided according to the agreement. It does not invalidate or violate the entire agreement, nor does it void the division provision only.

Question 6

The abbreviation "P.A." in the name "Painless Dental,P.A." means that this organization is

Accepted Answer

The abbreviation "P.A." is commonly used to denote a professional association. In this context, it is likely that "Painless Dental, P.A." is a dental practice that has organized as a professional association, indicating that the practice is owned and operated by licensed dental professionals working together to provide dental services.

Question 7

Caffeine Café,Inc. ,files its articles of incorporation with the appropriate government agency.Least likely to appear in the articles is the name of

Accepted Answer

The name of each shareholder is not typically required to be included in the articles of incorporation.

Question 8

Jen files a suit against Kopper Kettle Company.While the suit is pending,Kopper Kettle merges with Luminous Pans,Inc. ,with Luminous absorbing Kopper Kettle.Now,liability in the suit,if any,rests with

Accepted Answer

When one company merges with another, the acquiring company (in this case, Luminous Pans) assumes all liabilities and legal obligations of the merged company (Kopper Kettle). Therefore, liability in the suit would rest with Luminous Pans.

Question 9

Superior Home Products,Inc. ,is a corporation.Superior's implied powers enable it to

Accepted Answer

Implied powers refer to those powers which are not explicitly mentioned in the articles of incorporation or bylaws of a corporation, but are necessary or appropriate to carry out the corporation's stated purposes. Therefore, performing all acts reasonably necessary and appropriate to accomplish its corporate purposes is an example of implied powers. Options A, B, and C are examples of express powers that may be explicitly granted to a corporation in its articles of incorporation or bylaws.

Question 10

Penn files a suit against Roadway Sign Company While the suit is pending,Roadway consolidates with Synchronized Signal Corporation to form Traffic Management,Inc.Now,liability in the suit,if any,rests with

Accepted Answer

The answer of Penn files a suit against Roadway Sign...

Question 11

Corn Candy Corporation (CCC)has a right of action against Bio Farms,Inc.CCC merges with Agri Sweeteners,Inc. ,with Agri absorbing CCC.After the merger,CCC's right of action against Bio Farms can be exercised by

Accepted Answer

After the merger, Agri Sweeteners absorbs CCC and becomes the successor to CCC's rights, including the right of action against Bio Farms. Therefore, Agri Sweeteners can exercise CCC's right of action against Bio Farms.

Question 12

Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company combine so that all that remains after the papers have been signed is Ridgeway.This is

Accepted Answer

A merger is a combination of two or more entities into one, with one entity surviving. In this scenario, Ridgeway Sand & Gravel Corporation and Quick-Set Paving Company have combined, leaving only Ridgeway as the surviving entity.

Question 13

Mari buys 500 shares of common stock in National Livestock Traders,Inc.As a shareholder of record,Mari owns a proportionate interest in terms of

Accepted Answer

As a shareholder of record, Mari owns a proportionate interest in terms of control, earnings, and net assets of the company. This means that Mari has the right to vote on important company decisions, receive a portion of the company's profits in the form of dividends, and also potentially benefit from any appreciation in the value of the company's assets.

Question 14

Fact Pattern 24-2 
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors.
-Refer to Fact Pattern 24-2.A reasonable purpose for a stock transfer restriction in a closely held corporation,like the agreement between Bertram,Claudia,and Dynah,is

Accepted Answer

The restriction aims to limit the participation of outsiders, ensuring that control remains within the original group of shareholders.

Question 15

Eager Beaver Corporation fails to hold a meeting to adopt bylaws.Under this circumstance,Eager Beaver will still be treated as a legal corporation in those states that recognize the common law doctrine of

Accepted Answer

The concept of de facto corporation allows for a corporation to be considered legal even if there are defects in its formation, as long as certain conditions are met. One such condition is that the corporation must have made a good faith attempt to comply with all legal requirements for formation, including holding meetings and adopting bylaws. Therefore, even without adopting bylaws, Eager Beaver Corporation could still be considered a legal corporation if it meets the requirements of a de facto corporation.

Question 16

Realty Credit Company and Second Mortgage Corporation plan to consolidate.Most likely,the articles of consolidation will be filed with

Accepted Answer

The articles of consolidation are filed with the state's secretary of state. This is because the consolidation is a legal process that combines two or more corporations into a single entity under state law. The secretary of state is responsible for maintaining the official records of corporations registered in the state.

Question 17

Office Company and Keen Company wish to combine all assets,stock,and personnel into a new firm to be called OK Corporation.This is

Accepted Answer

The answer of Office Company and Keen Company wish to...

Question 18

Wild & Scenic River Tours,Inc. ,is a corporation.Wild & Scenic has the implied power to

Accepted Answer

The implied powers of a corporation are those powers necessary or incidental to carrying out its business objectives. Option D encompasses all possible implied powers, including the ability to issue stocks and bonds, execute contracts and negotiable instruments, and buy and sell or lease property.

Question 19

Raw Resources Corporation authorizes Stefan,its employee,to oversee its mining operation.In the course of this employment,Stefan commits a tort.Liability for this tort most likely rests with

Accepted Answer

The answer of Raw Resources Corporation authorizes Stefan,its employee,to oversee...

Question 20

Rapid Pest Control itself out to others as being a corporation but makes no attempt to incorporate.Ponce signs a contract with Rapid Pest Control that is not performed.Ponce files a suit against the firm.The court will likely hold that Rapid Pest Control is

Accepted Answer

Rapid Pest Control is holding itself out to others as a corporation, therefore creating the impression of being a corporation by estoppel. This means that even though it has not officially incorporated, it can be held liable in a lawsuit as if it were a corporation.

Quiz 24: Corporate Formation, financing, and Termination