Under the corporate form of business organization

1. Under the corporate form of business organization
a. a stockholder is personally liable for the debts of the corporation.
b. stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.
c. the corporation’s life is stipulated in its charter.
d. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

2 Stockholders of a corporation directly elect
a. the president of the corporation.
b. the board of directors.
c. the treasurer of the corporation.
d. all of the employees of the corporation.

3 Those most responsible for the major policy decisions of a corporation are the
a. stockholders.
b. board of directors.
c. management.
d. employees.

4 The chief accounting officer in a company is known as the
a. controller.
b. treasurer.
c. vice-president.
d. president.

5 Which one of the following would not be considered an advantage of the corporate form
of organization?
a. Limited liability of stockholders.
b. Separate legal existence.
c. Continuous life.
d. Government regulation.

6 The two ways that a corporation can be classified by purpose are
a. general and limited.
b. profit and not-for-profit.
c. state and federal.
d. publicly held and privately held.

7 The two ways that a corporation can be classified by ownership are
a. publicly held and privately held.
b. stock and non-stock.
c. inside and outside.
d. majority and minority.

8 Which of the following would not be true of a privately held corporation?
a. It is sometimes called a closely held corporation.
b. Its shares are regularly traded on the New York Stock Exchange.

c. It does not offer its shares for sale to the general public.
d. It is usually smaller than a publicly held company.

9 Which of the following is not true of a corporation?
a. It may buy, own, and sell property.
b. It may sue and be sued.
c. The acts of its owners bind the corporation.
d. It may enter into binding legal contracts in its own name.

10 Jason Hansen has invested $600,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Hansen stand to lose?
a. Up to his total investment of $600,000.
b. Zero.
c. The $600,000 plus any personal assets the creditors demand.
d. $400,000.

11 Which of the following statements reflects the transferability of ownership rights in a corporation?
a. If a stockholder decides to transfer ownership, he must transfer all of his shares.
b. A stockholder may dispose of part or all of his shares.
c. A stockholder must obtain permission of the board of directors before selling shares.
d. A stockholder must obtain permission from at least three other stockholders before
selling shares.

12 A corporate board of directors does not generally
a. select officers.
b. formulate operating policies.
c. declare dividends.
d. execute policy.

13 The officer that is generally responsible for maintaining the cash position of the
corporation is the
a. controller.
b. treasurer.
c. cashier.
d. internal auditor.

14 The ability of a corporation to obtain capital is
a. enhanced because of limited liability and ease of share transferability.
b. less than a partnership.
c. restricted because of the limited life of the corporation.
d. about the same as a partnership.

15 Which of the following statements concerning taxation is accurate?
a. Partnerships pay state income taxes but not federal income taxes.
b. Corporations pay federal income taxes but not state income taxes.
c. Corporations pay federal and state income taxes.
d. Only the owners must pay taxes on corporate income.

16 Which of the following statements is not considered a disadvantage of the corporate
form of organization?
a. Additional taxes.
b. Government regulations.
c. Limited liability of stockholders.
d. Separation of ownership and management.

17 A disadvantage of the corporate form of organization is
a. professional management.
b. tax treatment.
c. ease of transfer of ownership.
d. lack of mutual agency.

18 A disadvantage of the corporate form of business is
a. its status as a separate legal entity.
b. continuous existence.
c. government regulation.
d. ease of transfer of ownership.

19 Which of the following phrases is not descriptive of the corporate form of business?
a. Professional management.
b. Double taxation on distributed earnings.
c. Unlimited liability.
d. Continuous existence.

20 Which one of the following is not an ownership right of a stockholder in a corporation?
a. To vote in the election of directors.
b. To declare dividends on the common stock.
c. To share in assets upon liquidation.
d. To share in corporate earnings.