Mann_BLRB 9_TB_Ch34

Business Law and the Regulation of Business

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Chapter 34—Nature and Formation of Corporations TRUE/FALSE 1. A corporation has perpetual existence unless otherwise stated in its articles of incorporation. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. A corporation owned by one person is treated under the law as separate from that person. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Once a shareholder sells the stock of the corporation, since the ownership of the corporation changes, a new corporation is formed. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 4. Title to corporate property belongs to the shareholders. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. A corporation is a creature of the state and may be formed only by substantial compliance with a state incorporation statute. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. Zeron Corporation is incorporated in the State of West Virginia. It now wants to open a retail outlet in Kentucky. Zeron must obtain a certificate qualifying it to do business in Kentucky. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. A corporation is considered a citizen under the Fourteenth Amendment provision that, “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Under the RMBCA, a pre-incorporation subscription may be revoked at any time without the consent of the subscribers. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 10. Promoters have a fiduciary relationship with the corporation. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the Office of the Secretary of State or some other public office. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 12. A corporation is a domestic corporation in the state in which it is incorporated. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. Big Burger Co. sues Bakum Corporation for breach of contract for $1,000 of hamburger buns that were not delivered. Bakum may assert as a defense to payment that Big Burger is not a de jure corpor- ation. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 14. "Piercing the corporate veil" will result in personal liability of shareholders. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. If a corporate power is not expressly provided in the charter or bylaws, exercise of such power is ultra vires. ANS: F
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Mann_BLRB 9_TB_Ch34 - Chapter 34-Nature and Formation of...

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