TJ_Comp 20_TB_Ch45

TJ_Comp 20_TB_Ch45 - Chapter 45SHAREHOLDER RIGHTS IN...

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Chapter 45—SHAREHOLDER RIGHTS IN CORPORATIONS TRUE/FALSE 1. The two most common instruments used to provide the capital structure of a corporation are stocks and bonds. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. Each shareholder owns a proportionate share of the property of the corporation. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Membership in a corporation is based on the ownership of one or more shares of stock of the corpora- tion. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. Shares of stock that have been issued to stockholders in a corporation are said to be outstanding. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. All shares must have a par value of at least one dollar per share. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 6. If a corporate stock has a par value, the person subscribing to the stock and acquiring it from the cor- poration must pay that par value amount. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. Preferred stock cannot have priority over common stock with respect to dividends. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Some preferred stock can be given the right of participation. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Shares only can exist as long as the shareholder is alive. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 10. Shares of stock may not be acquired through subscription but may be acquired through a transfer of existing shares from a shareholder or from the corporation. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 11. A contract for the sale of shares must be evidenced in writing and include the price and quantity of the securities. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic
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12. No writing is required for a contract by which a broker agrees with a customer to buy or sell securities for the customer. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. A preincorporation subscription to stock generally is treated as an offer to the corporation to buy the stock when the corporation is formed and the stock is thereafter issued. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Under the RMBCA, a preincorporation subscription agreement is irrevocable for six months. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. Upon acceptance of a subscription after incorporation, the subscriber immediately attains the rights, privileges, and liabilities of a shareholder, even though the subscriber has not paid any of the purchase price. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 16. Restrictions on the transfer of stock are valid provided that they are not unreasonable. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 17. A provision giving a corporation the right to purchase a shareholder's shares on the death of the share- holder is invalid. ANS: F
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TJ_Comp 20_TB_Ch45 - Chapter 45SHAREHOLDER RIGHTS IN...

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