Question

1. _____ What must be filed in order to form a limited liability company?
     a.     Nothing.
     b.     Articles of incorporation.
     c.     Articles of organization.
     d.     Certificate of limitation.
               

2. _____ Ten persons formed the Magic City Company, LLC for a term of 20 years. Shortly before the expiration of this period, the members held a vote on whether to continue the business for an additional five years. The vote was eight votes in favor and two against continuing. As a result:
     a.     The limited liability company will continue for an additional five years.
     b.     The limited liability company will continue as an at-will LLC.
     c.     The limited liability company will be dissolved at the end of the original 20-year term.
     d.     The court will take over operation of the LLC upon expiration of the original term.
     


3. _____ When a corporate board declares a dividend, it is generally payable to all shareholders who      owned shares:
a.     anytime during the tax year.
b.     on the record date.
c.     on the date the dividends are to be paid.
d.     on the date the dividends are declared.
     

4. _____ Boards or Directors often delegate authority to smaller groups called committees. Which of the following board activities cannot be delegated to a committee?
a.     Management compensation
b.     Litigation decisions
c.     Company audits
d.     Dividend declaration
          
          

5. _____ The City of Maysville has formed a separate corporation to operate the water system for the city. This corporation is best described as what type of corporation?
a.     Public.
b.     Private.
c.     Profit.
d.     Nonprofit.


6. _____ Mallard Corporation is incorporated in Iowa and does business in Ohio. This corporation is:
a.                   A domestic corporation as to both Iowa and Ohio.
b.                   A foreign corporation as to both Iowa and Ohio.
c.                   A domestic corporation as to Iowa and a foreign corporation as to Ohio.
d.                   A domestic corporation as to Ohio and a foreign corporation as to Iowa.


7. _____ Mary is planning to form a corporation to manufacture and distribute electric solar panels. She will sell the panels only in the Rocky Mountain states. These panels will be manufactured at two factories, one in Illinois and one in Florida. The headquarters of this company will be in Louisiana. In which state(s) could Mary incorporate this business?
a.     Florida, Illinois, or Louisiana.
b.     Louisiana only.
c.     Florida, Illinois, Louisiana, or any state in which the products are sold.
d.     Any of the fifty states.


8. _____ Jan owns 800 of the 2,000 issued and outstanding shares of Jackalope Corporation. There are five members of the board of directors, three of whom are up for election at a shareholders’ meeting. If each share of stock is entitled to one vote, what is the maximum number of votes that Jan can cast for any one of the candidates for the positions on the board under cumulative voting?
a.                   800.
b.                   2,000.
c.                   2,400.
d.                   4,000.
     

9. _____ At the time Corporation A was created, the management was concerned about potential hostile takeovers. In the articles of incorporation they included a provision that all of Corporation A’s contracts would expire if the ownership of Corporation A changed hands. This anti-takeover technique is best described as:
a.     Selling a crown jewel.
b.     A poison pill.
c.     A white knight merger.
d.     A reverse merger.
     

10. _____ Corporation L is the target of a hostile takeover by Corporation O. Corporation L’s most valuable asset is its oil fields. To stop the takeover, Corporation L decides to sell its oil fields. This anti-takeover technique is best described as:
a.     Selling a crown jewel.
b.     A poison pill.
c.     A white knight merger.
d.     A reverse merger.
11. _____ Martha started a flower shop as a sole proprietor. After one year, she was forced to close the shop because business was so bad. At that time, the business assets totaled $50,000, but the business liabilities totaled $125,000. Which of the following statements is true?
a.     Martha is personally liable for the additional $75,000.
b.     Martha’s business creditors can collect only the $50,000 of business assets.
c.     Martha’s business creditors can collect only the $50,000 now, but if Martha ever goes into business again, they can get the assets of the new business.
d.     Once Martha terminates the sole proprietorship, the business creditors cannot get any amounts, including the $50,000.
          

12. _____ All of the following are positive effects of the Enron debacle except:
     a.     Many U. S. firms cleaned up their accounting practices.
b.                   The federal government replaced depleted employee pension funds invested in Enron stock.
c.                   Shareholders and creditors became more demanding of financial data before committing funds to corporations.
     d.     The SEC became a fiercer watchdog of corporate activity.


13. _____ Jane and Joan decide to open a plumbing business. Both contribute money to the business, but because Jane has expertise in plumbing, she makes all the management decisions. Joan will not participate in much of the day-to-day operations. Jane and Joan will split net income equally. Jane and Joan make no filings associated with this business. This enterprise is:
a.     A general partnership.
b.     Not a general partnership because there is no association of two or more people.
c.     Not a general partnership because they are not carrying on a trade or business.
d.     Not a general partnership because they do not co-own the business.
          


14. _____ Amy is a partner in a partnership. The partnership agreement states that if one of the partners dies, the business will continue with the remaining partners. Amy dies. Which of the following best describes this situation?
a.                   There has been a dissolution of the old partnership and the creation of a new one.
b.                   The partnership agreement prevents the dissolution of the partnership; the old partnership continues with the remaining partners as partners.
c.                   The partnership agreement prevents the dissolution of the partnership, the old partnership continues with Amy’s heirs as new partners.
d.     The death of a partner does not dissolve the partnership in any case.



15. _____ John works for a company that provides to all of its employees computers, access to a service provider that provides access to the Internet, and an email address. While at work, John often accesses the email account that he also uses at home. John’s employer would like to access John’s email to see if he is using company time for personal purposes. Which of the following is true?
     a.     The company must get a search warrant before it can access any of John’s stored email.
b.     The company can have access to email stored at John’s work email address, but not to the email stored at the email address he usually accesses from home.
c.     The company can have access to email stored at either location if the email at the address he accesses from home was sent or received during John’s time at work.
d.     The company cannot access any of John’s stored email unless it obtains the assistance of law enforcement personnel and obtains a search warrant.