©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
Actg 470 Exam 2 Questions With Correct
Answers 100% Verified.
What is a corporation? - Answer✔-one of several different forms kf business structure
-a legal entity, charactered by a U.S., state or federal government, and seperate and distinct
frim the persons who own it, giving rise to a jurists remark that it has "neither a soul to damn
nor a body to kick." Nonetheless, it is required by the courts as an artificial person; it may own
property, incur debts, sue, or be sued.
Sole Proprietorship - Answer✔-A business owned by one person
-simple idea, brought to reality by a sole owner
-no legal formalities
-business is an extension of the persona of owners, who have full personal liability for the debts
of the business
General Partnership - Answer✔-partnership in which partners share equally in both
responsibility and liability
-very bad
-no legal formalities
-business is an extension of the persona of owners, who have full personal liability for the debts
of the business
business corporation - Answer✔-Legal entity existing under the authority of the state
legislature
-legal person separate and distinct from the owners
-the owners and officers generally have no risk of personal liability for the business debts
Corporation - Answer✔-A business owned by stockholders who share in its profits but are not
personally responsible for its debts
- creation of law
-artificial person, not a real person
1|Page
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
-it is a "person" only in so far as the law says it is a person, and only has such rights and powers
as the law gives it, nothing more nothing less
-no soul to damn nor body to kick
If a corporation is soulless, bodiless and mindless, how does it do anything? - Answer✔It
doesn't, only people do something
Ex: shareholders own a corporation
Since 2010, the U.S. Supreme Court has ruled that a business corporation can have... -
Answer✔-the right of free speech on political issues
-religious views on women's reproductive rights and same sex marriage
-a race, and capable of being the victim of racial discrimination
What is the role of a corporation? - Answer✔-capitalism and freedom(aka shareholder view)
-stakeholder view
Shareholder view of corporation - Answer✔There is one and only one social responsibility of
business: to use its resources and engage in activities designed to increase its profits so long as
it stays within the rules of the game, which is to say, engages in open and free competition,
without deception or fraud
agency - Answer✔The board is nothing more than an agent to the shareholders
Is it appropriate for a member of the management of the company, on his or her own authority,
to make a charitable contribution of the company's funds? - Answer✔Friedman would agree
that it is not because it's not the managers money
Friedman's 3 concepts - Answer✔Ownership, agency, contract
ownership - Answer✔Any profits made by the company rightfully belong to the people that
own that company
contract - Answer✔-everything we doin business is a relationship built on some form of mutual
agreement
-Friedman: calls competitive capitalism or free enterprise: two sides of a transaction enter into
a deal voluntarily and without coercion for their mutual benefit
Ethics in contracts - Answer✔What an individual may contract to buy or do is a reflection of
their ethics
Stakeholder view of corporation - Answer✔-create as much value for stakeholders as possible
and that no stakeholder interest is viable in isolation of the other stakeholders, including
shareholders
2|Page
Actg 470 Exam 2 Questions With Correct
Answers 100% Verified.
What is a corporation? - Answer✔-one of several different forms kf business structure
-a legal entity, charactered by a U.S., state or federal government, and seperate and distinct
frim the persons who own it, giving rise to a jurists remark that it has "neither a soul to damn
nor a body to kick." Nonetheless, it is required by the courts as an artificial person; it may own
property, incur debts, sue, or be sued.
Sole Proprietorship - Answer✔-A business owned by one person
-simple idea, brought to reality by a sole owner
-no legal formalities
-business is an extension of the persona of owners, who have full personal liability for the debts
of the business
General Partnership - Answer✔-partnership in which partners share equally in both
responsibility and liability
-very bad
-no legal formalities
-business is an extension of the persona of owners, who have full personal liability for the debts
of the business
business corporation - Answer✔-Legal entity existing under the authority of the state
legislature
-legal person separate and distinct from the owners
-the owners and officers generally have no risk of personal liability for the business debts
Corporation - Answer✔-A business owned by stockholders who share in its profits but are not
personally responsible for its debts
- creation of law
-artificial person, not a real person
1|Page
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:43 PM.
-it is a "person" only in so far as the law says it is a person, and only has such rights and powers
as the law gives it, nothing more nothing less
-no soul to damn nor body to kick
If a corporation is soulless, bodiless and mindless, how does it do anything? - Answer✔It
doesn't, only people do something
Ex: shareholders own a corporation
Since 2010, the U.S. Supreme Court has ruled that a business corporation can have... -
Answer✔-the right of free speech on political issues
-religious views on women's reproductive rights and same sex marriage
-a race, and capable of being the victim of racial discrimination
What is the role of a corporation? - Answer✔-capitalism and freedom(aka shareholder view)
-stakeholder view
Shareholder view of corporation - Answer✔There is one and only one social responsibility of
business: to use its resources and engage in activities designed to increase its profits so long as
it stays within the rules of the game, which is to say, engages in open and free competition,
without deception or fraud
agency - Answer✔The board is nothing more than an agent to the shareholders
Is it appropriate for a member of the management of the company, on his or her own authority,
to make a charitable contribution of the company's funds? - Answer✔Friedman would agree
that it is not because it's not the managers money
Friedman's 3 concepts - Answer✔Ownership, agency, contract
ownership - Answer✔Any profits made by the company rightfully belong to the people that
own that company
contract - Answer✔-everything we doin business is a relationship built on some form of mutual
agreement
-Friedman: calls competitive capitalism or free enterprise: two sides of a transaction enter into
a deal voluntarily and without coercion for their mutual benefit
Ethics in contracts - Answer✔What an individual may contract to buy or do is a reflection of
their ethics
Stakeholder view of corporation - Answer✔-create as much value for stakeholders as possible
and that no stakeholder interest is viable in isolation of the other stakeholders, including
shareholders
2|Page
