Bule GMU Final Exam Study Guide
questions with verified answers
graded A+
Model Business Corporation Act (MBCA) - correct answer ✔✔A codification of modern
corporation law that has influential in the drafting and revision of state corporation statutes.
RMBCA - correct answer ✔✔Revised model business corporation act.
Corporation - correct answer ✔✔A legal entity formed in compliance with statutory
requirements that is distinct from it's shareholder-owners. It can be owned by a single person or
millions of shareholders. Recognized as a 'person' and enjoys many of the same rights and
privileges under state and federal law that people do.
Board of Directors - correct answer ✔✔Responsible for the overall management of the firm.
members are elected by the shareholders. They hire the corporate officers and other employees
to run the daily business operations, determines the capital structure of the corporation, and
declares dividends. Ultimate authority in any corporation. No individual director can act as an
agent to bind the corporation. The number of directors is stated in the corporation's bylaws.
Directors usually serve a term of a year. Directors can be removed for "cause".
Corporate shareholders - correct answer ✔✔Own a piece of the corporation. They are not
normally personally liable for the obligations of the corportation beyond the extent of their own
investments.
Dividend - correct answer ✔✔A distribution to corporate shareholders of corporate profits or
income, disbursed in proportion to the number of shares held. Double taxation is a part of
receiving these profits.
,Retained Earnings - correct answer ✔✔The portion of a corporation's profits that has not been
paid out as dividends to shareholders.
Criminal acts and liability related to corporations - correct answer ✔✔A corporation may be
held liable for the criminal acts of it's agents and employees provided the punishment is one
that can be applied to the corporation.
Classification of corporations - correct answer ✔✔Can be based on its location, purpose, and
ownership characteristics.
Domestic Corporation - correct answer ✔✔In a given state, a corporation that does business in,
and is organized under the law of, that state.
Foreign Corporation - correct answer ✔✔In a given state, a corporation that does business in
the state without being incorporated therein.
Alien Corporation - correct answer ✔✔A designation in the United States for a corporation
formed in another country but doing business in the United States.
Certificate of Authority - correct answer ✔✔A corporation doesn't have an automatic right to
do business in another state, so in some instances they must get a certificate of authority.
Public Corporation - correct answer ✔✔Formed by the government to meet some political or
governmental purpose. (EX: postal service) Same as a public held corporation whose shares are
publicly traded in securities markets, such as the new york stock exchange.
Private Corporation - correct answer ✔✔Created wholly or in part for private benefit.
Nonprofit Corporation - correct answer ✔✔Corporations formed for another purpose than
making profits. Example: Private hospitals, educational institutions.
, Close Corporation - correct answer ✔✔A corporation whose shareholders are limited to a small
group of persons, often only family members. IN this type of corporation, a shareholder's rights
to transfer shares to others are often restricted.
S Corporation - correct answer ✔✔A close business corporation that has most corporate
attributes, including limited liability, but qualifies under the Internal Revenue Code to be taxed
as a partnership.
Requirements for S Corporation Status - correct answer ✔✔1. Must be a domestic corporation.
2. The corp. must not be a member of an affiliated group of corporations
3. The shareholders of the corp. must be individuals, estates, or certain trusts. Partnerships and
nonqualifying trusts cannot be shareholders. Corporations can be shareholders under certain
circumstances.
4. The corp. must have no more than 100 shareholders.
5. The corp. must only have one class of stock, although all shareholders do not have the same
voting rights.
6. No shareholder of the corporation may be a nonresident alien.
Professional Corporations - correct answer ✔✔Professionals such as physicians, lawyers,
dentists, and accountants can be this type of corporation.
Benefit Corporation - correct answer ✔✔A for-profit corporation that seeks to have a material
positive impact on society and the environment. This new business form is available by statute
in a growing number of states.
Ways in which benefit corporations differ from traditional corporations: - correct answer ✔✔1.
Purpose-- Purpose is to benefit society and the environment as a whole and this is taken heavily
into consideration when making decisions.
questions with verified answers
graded A+
Model Business Corporation Act (MBCA) - correct answer ✔✔A codification of modern
corporation law that has influential in the drafting and revision of state corporation statutes.
RMBCA - correct answer ✔✔Revised model business corporation act.
Corporation - correct answer ✔✔A legal entity formed in compliance with statutory
requirements that is distinct from it's shareholder-owners. It can be owned by a single person or
millions of shareholders. Recognized as a 'person' and enjoys many of the same rights and
privileges under state and federal law that people do.
Board of Directors - correct answer ✔✔Responsible for the overall management of the firm.
members are elected by the shareholders. They hire the corporate officers and other employees
to run the daily business operations, determines the capital structure of the corporation, and
declares dividends. Ultimate authority in any corporation. No individual director can act as an
agent to bind the corporation. The number of directors is stated in the corporation's bylaws.
Directors usually serve a term of a year. Directors can be removed for "cause".
Corporate shareholders - correct answer ✔✔Own a piece of the corporation. They are not
normally personally liable for the obligations of the corportation beyond the extent of their own
investments.
Dividend - correct answer ✔✔A distribution to corporate shareholders of corporate profits or
income, disbursed in proportion to the number of shares held. Double taxation is a part of
receiving these profits.
,Retained Earnings - correct answer ✔✔The portion of a corporation's profits that has not been
paid out as dividends to shareholders.
Criminal acts and liability related to corporations - correct answer ✔✔A corporation may be
held liable for the criminal acts of it's agents and employees provided the punishment is one
that can be applied to the corporation.
Classification of corporations - correct answer ✔✔Can be based on its location, purpose, and
ownership characteristics.
Domestic Corporation - correct answer ✔✔In a given state, a corporation that does business in,
and is organized under the law of, that state.
Foreign Corporation - correct answer ✔✔In a given state, a corporation that does business in
the state without being incorporated therein.
Alien Corporation - correct answer ✔✔A designation in the United States for a corporation
formed in another country but doing business in the United States.
Certificate of Authority - correct answer ✔✔A corporation doesn't have an automatic right to
do business in another state, so in some instances they must get a certificate of authority.
Public Corporation - correct answer ✔✔Formed by the government to meet some political or
governmental purpose. (EX: postal service) Same as a public held corporation whose shares are
publicly traded in securities markets, such as the new york stock exchange.
Private Corporation - correct answer ✔✔Created wholly or in part for private benefit.
Nonprofit Corporation - correct answer ✔✔Corporations formed for another purpose than
making profits. Example: Private hospitals, educational institutions.
, Close Corporation - correct answer ✔✔A corporation whose shareholders are limited to a small
group of persons, often only family members. IN this type of corporation, a shareholder's rights
to transfer shares to others are often restricted.
S Corporation - correct answer ✔✔A close business corporation that has most corporate
attributes, including limited liability, but qualifies under the Internal Revenue Code to be taxed
as a partnership.
Requirements for S Corporation Status - correct answer ✔✔1. Must be a domestic corporation.
2. The corp. must not be a member of an affiliated group of corporations
3. The shareholders of the corp. must be individuals, estates, or certain trusts. Partnerships and
nonqualifying trusts cannot be shareholders. Corporations can be shareholders under certain
circumstances.
4. The corp. must have no more than 100 shareholders.
5. The corp. must only have one class of stock, although all shareholders do not have the same
voting rights.
6. No shareholder of the corporation may be a nonresident alien.
Professional Corporations - correct answer ✔✔Professionals such as physicians, lawyers,
dentists, and accountants can be this type of corporation.
Benefit Corporation - correct answer ✔✔A for-profit corporation that seeks to have a material
positive impact on society and the environment. This new business form is available by statute
in a growing number of states.
Ways in which benefit corporations differ from traditional corporations: - correct answer ✔✔1.
Purpose-- Purpose is to benefit society and the environment as a whole and this is taken heavily
into consideration when making decisions.
