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Business Ethics 2016 - QUIZ & ANSWERS (16) - Corporations and Corporate Governance

Business Ethics 2016

BUSINESS ETHICS 2016

Case study guides and test bank and answer keys (2016)

The Legal Environment of Business and Online Commerce, 8e (Cheeseman)

 

 

The Legal Environment of Business and Online Commerce, 8e (Cheeseman)

Chapter 16   Corporations and Corporate Governance

 

1) The ________ Act of 2002 is a federal statute enacted by Congress to improve corporate governance.

  1. A) Brown-Kaufmann
  2. B) Lanham
  3. C) Glass-Steagall
  4. D) Sarbanes-Oxley

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

2) Which of the following entities elects members of the board of directors for a corporation?

  1. A) the CEO
  2. B) the corporate officers
  3. C) the shareholders
  4. D) the employees

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

3) Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation are known as ________.

  1. A) corporate officers
  2. B) shareholders
  3. C) registered agents
  4. D) managing directors

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

4) The ________ is a general rule of corporate law that provides that generally, shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

  1. A) limited-purpose clause
  2. B) limited liability of shareholders
  3. C) preferred shareholder rule
  4. D) nonparticipating shareholder rule

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

5) The ________ own(s) a corporation.

  1. A) shareholders
  2. B) board of directors
  3. C) CEO
  4. D) corporate officers

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

6) ________ are a panel of decision makers who are elected by the shareholders.

  1. A) Registered agents
  2. B) Corporate officers
  3. C) Stakeholders
  4. D) Board of directors

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

7) Shareholders are owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

8) Corporation codes regulate the formation, operation, and dissolution of corporations.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

9) Corporations are not allowed to enter into contracts in their own name.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

10) Shareholders have unlimited liability for the debts and obligations of a corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

11) The board of directors makes policy decisions concerning the operation of a corporation.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

12) A panel of persons who are elected by shareholders that make policy decisions concerning the operation of a corporation is known as the ________.

Answer:  board of directors

Diff: 1

Skill:  Legal Concepts

LO:  16.1 Define corporation and list the major characteristics of a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

13) A corporation is referred to as a(n) ________ corporation in the state in which it was formed.

  1. A) foreign
  2. B) domestic
  3. C) alien
  4. D) multinational

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

14) ________ corporations are corporations that have many shareholders and whose securities are often traded on organized securities markets.

  1. A) Closely held
  2. B) Nonprofit
  3. C) Publicly held
  4. D) Professional

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

15) Which of the following is a definition of a foreign corporation?

  1. A) a corporation with incorporations in multiple states
  2. B) a corporation in the state in which it was incorporated
  3. C) a corporation in states other than the one in which it was incorporated
  4. D) a corporation in the United States which has been incorporated in another country

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

16) A corporation in the United States that has been incorporated in another country is referred to as a(n) ________ corporation.

  1. A) foreign
  2. B) domestic
  3. C) onshore
  4. D) alien

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

17) Which of the following is true of a corporation's incorporation in a state?

  1. A) Domestic corporations can incorporate in only one state.
  2. B) Domestic corporations can incorporate in all states in which they conduct business.
  3. C) Alien corporations can only incorporate in one state.
  4. D) Foreign corporations can incorporate in more than one state.

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

18) ________ are the basic governing documents of a corporation which must be drafted and filed with, and approved by, the state before the corporation can be officially incorporated.

  1. A) Debt securities
  2. B) Debentures
  3. C) Certificates of authority
  4. D) Articles of incorporation

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

19) Which of the following must be included in the articles of incorporation?

  1. A) the minutes of the first organizational meeting of the board of directors
  2. B) the number of shares the corporation is authorized to issue
  3. C) the terms warranting corporate dissolution
  4. D) the corporate seal used in the articles of incorporation

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

20) A person or corporation that is empowered to accept service of process on behalf of a corporation is referred to as a(n) ________.

  1. A) promoter
  2. B) shareholder
  3. C) registered agent
  4. D) incorporator

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

21) A detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation are referred to as ________.

  1. A) ultra vires rules
  2. B) articles of incorporation
  3. C) bylaws
  4. D) corporation codes

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

22) Which of the following is true of corporate bylaws?

  1. A) They only contain rules addressing how the corporation can interact with the government.
  2. B) They are only adopted by the shareholders of the corporation.
  3. C) They are not binding on the directors or shareholders of the corporation.
  4. D) They do not have to be filed with any government official.

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

23) Which of the following is true of a C Corporation?

  1. A) It does not pay taxes at the corporate level.
  2. B) Shareholders of such a corporation are not required to pay taxes on their dividends.
  3. C) Any corporation with more than 100 shareholders is automatically a C corporation for federal income tax purposes.
  4. D) Nonresident aliens cannot be shareholders unless they demonstrate due diligence in meeting federal requirements for residency status.

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

24) Which of the following is true of an S corporation?

  1. A) It can have no more than 100 shareholders.
  2. B) Only a foreign corporation can become an S corporation.
  3. C) It is taxed at the corporate level.
  4. D) It must be a member of an affiliated group of corporations.

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

25) Which of the following criteria must be satisfied for a corporation to be treated as an S corporation?

  1. A) The corporation's shareholders must be other corporations or partnerships.
  2. B) The corporation's shareholders must be citizens or residents of the United States.
  3. C) The corporation must have more than 100 shareholders.
  4. D) The corporation must have more than one class of stock.

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

26) ________ is a type of equity security that represents the residual value of a corporation.

  1. A) Common stock
  2. B) Preferred stock
  3. C) Cumulative preferred stock
  4. D) Participating preferred stock

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

27) A ________ is a preferred stockholder's right to be paid a stated dollar amount if a corporation is dissolved and its assets redistributed.

  1. A) noncumulative preference
  2. B) cumulative dividend preference
  3. C) dividend preference
  4. D) liquidation preference

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

28) Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends is known as ________ stock.

  1. A) cumulative preferred
  2. B) noncumulative preferred
  3. C) common
  4. D) participating preferred

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

29) Which of the following shares have the right to vote?

  1. A) unissued shares
  2. B) treasury shares
  3. C) outstanding shares
  4. D) liquidated shares

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

30) Issued shares that have been repurchased by the corporation are referred to as ________ shares.

  1. A) outstanding
  2. B) liquidated
  3. C) unissued
  4. D) treasury

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

31) A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) ________.

  1. A) option contract
  2. B) right of first refusal
  3. C) indenture
  4. D) shareholder voting agreement

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

32) Which of the following is true of treasury shares?

  1. A) They cannot be issued by the corporation.
  2. B) They cannot be voted by the corporation.
  3. C) They are owned by shareholders.
  4. D) They are entitled to receive dividends.

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

33) Securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued are known as ________.

  1. A) authorized shares
  2. B) preferred stocks
  3. C) common stocks
  4. D) fixed income securities

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

34) A long-term debt security that is secured by some form of collateral is referred to as a ________.

  1. A) treasury share
  2. B) bond
  3. C) note
  4. D) debenture

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

35) A(n) ________ is a debt security with a maturity of five years or less.

  1. A) bond
  2. B) debenture
  3. C) indenture
  4. D) note

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

36) Which of the following is true of a note?

  1. A) It is a long-term unsecured debt instrument that is based on a corporation's general credit standing.
  2. B) It is a long-term debt security that is secured by some form of collateral.
  3. C) It can be either unsecured or secured.
  4. D) It contains a conversion feature.

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

37) Private corporations range from small one-owner corporations to large multinational corporations such as Microsoft Corporation.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

38) A corporation is a foreign corporation in states other than the one in which it is incorporated.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

39) A corporation can be incorporated in several states.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

40) The articles of incorporation must contain the name and address of every incorporator.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

41) Corporations cannot provide their articles of incorporation online.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

42) Provisions concerning the limitation or regulation of powers of the corporation cannot be included in the articles of incorporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

43) The bylaws of a corporation must be filed with a government official.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

44) The shareholders of a corporation have the absolute right to amend the bylaws.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

45) An S corporation must pay federal income tax at the corporate level.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

46) Foreign corporations can elect to be taxed as an S corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

47) Any corporation with more than 100 shareholders is automatically considered a C corporation for federal income tax purposes.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

48) An S corporation can have nonresident aliens as shareholders.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

49) A C corporation pays taxes at the corporate level and also at the shareholder level.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

50) An S corporation cannot have more than 100 shareholders.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

51) An S corporation election is made by filing a Form 2553 with the Federal Trade Commission.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

52) Common stockholders receive dividends declared by the board of directors.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

53) Preferred stockholders are given the right to vote for the board of directors of the corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

54) In case a corporation's assets are liquidated, the preferred stockholders are paid before common stockholders.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

55) Convertible preferred stock permits the preferred stockholders to convert their shares into common stock.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

56) Authorized shares that have been sold by a corporation are called issued shares.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

57) Shares that are repurchased by a corporation are called unissued shares.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

58) Treasury shares cannot be reissued by a corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

59) Only outstanding shares have the right to vote.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

60) In debt securities, the corporation is the debtor and the holder is the creditor.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

61) Secured bondholders can foreclose on the collateral in the event of nonpayment of interest or principal.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

62) A note is a long-term debt security that is secured by some form of collateral.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

63) A corporation that is incorporated in another country is known as a(n) ________ corporation.

Answer:  alien

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

64) A(n) ________ is a person or a corporation that is empowered to accept service of process on behalf of a corporation and is identified in the articles of incorporation.

Answer:  registered agent

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

65) The articles of incorporation is also known as the ________.

Answer:  corporate charter

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

66) Stock that permits a corporation to buy back the preferred stock at some future date is known as ________.

Answer:  redeemable preferred stock/callable preferred stock

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

67) Authorized shares that have not been sold by the corporation are known as ________.

Answer:  unissued shares

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

68) A(n) ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing.

Answer:  debenture

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

69) A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) ________.

Answer:  indenture agreement/indenture

Diff: 1

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

70) Give an account of publicly held and closely held corporations.

Answer:  Publicly held corporations have many shareholders. Often, they are large corporations with hundreds or thousands of shareholders, and their shares are traded on organized securities markets. The shareholders rarely participate in the management of such corporations.

A closely held corporation, on the other hand, is one whose shares are owned by a few shareholders who are often family members, relatives, or friends. Frequently, the shareholders are involved in the management of the corporation. The shareholders sometimes enter into buy-and-sell agreements that prevent outsiders from becoming shareholders.

Diff: 2

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

 

 

71) What is common stock? What are its features?

Answer:  Common stock is an equity security that represents the residual value of a corporation. Common stock has no preferences. That is, creditors and preferred shareholders must receive their required interest and dividend payments before common shareholders receive anything. Common stock does not have a fixed maturity date. If a corporation is liquidated, the creditors and preferred shareholders are paid the value of their interests first, and the common shareholders are paid the value of their interests last. Corporations may issue different classes of common stock. Persons who own common stock are called common stockholders. A common stockholder's investment in the corporation is represented by a common stock certificate. Common stockholders have the right to elect directors and to vote on mergers and other important matters. In return for their investment, common stockholders receive dividends declared by the board of directors.

Diff: 2

Skill:  Legal Concepts

LO:  16.2 Describe the process of forming and financing a corporation.

AACSB:  Analytical thinking

Classification:  Concept

72) Which of the following is true of shareholders?

  1. A) They cannot enter into contracts that bind the corporation.
  2. B) They cannot vote to elect the board of directors.
  3. C) They cannot take active charge in deciding fundamental changes in the corporation.
  4. D) They are considered as agents of the corporation.

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

73) When is the annual shareholders' meeting held?

  1. A) according to the date fixed in the bylaws
  2. B) at the discretion of the board of directors
  3. C) only if and when there is an organizational crisis
  4. D) only when necessary to elect a new board of members

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

74) A written document in which a shareholder authorizes a person to vote the shareholder's shares at the shareholders' meetings in the event of the shareholder's absence is known as a ________.

  1. A) quorum
  2. B) notice of shareholder's meeting
  3. C) certificate of authority
  4. D) proxy

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

75) The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the articles of incorporation, and 17,501 shares are represented at the meeting. According to the Revised Model Business Corporation Act (RMBCA), what is the minimum number of outstanding shares that must be represented in this case to have a quorum?

  1. A) 12,001
  2. B) 18,501
  3. C) 15,001
  4. D) 17,501

Answer:  C

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

76) The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the company's articles of incorporation, and 17,501 shares are represented at the meeting. If an amendment to the articles of incorporation is put to vote at this meeting, which of the following statements is true in terms of passage of the amendment?

  1. A) The amendment will not pass, since all 30,000 outstanding shares must be represented at the meeting in order to vote to amend the articles of incorporation.
  2. B) The amendment will pass if all 17,501 shares represented at the meeting vote to approve it.
  3. C) The amendment will pass if 4,376 shares represented at the meeting vote to approve it.
  4. D) The amendment will pass if 8,751 shares represented at the meeting vote to approve it.

Answer:  D

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

 

77) Bilkis Brans has 20,000 outstanding shares with four shareholders. Ester owns 9,000 shares, Mendez owns 4,000 shares, Judy owns 4,000 shares, and Aaron owns 3,000 shares. Suppose that two directors of the corporation are to be elected from a potential pool of five candidates. Ester favors candidates 1 and 5, Mendez favors candidates 2 and 4, Judy favors candidates 3 and 4, and Aaron favors candidates 2 and 3. If straight voting occurs, which of the two candidates are likely to win?

  1. A) candidates 1 and 5
  2. B) candidates 1 and 4
  3. C) candidates 2 and 3
  4. D) candidates 2 and 4

Answer:  A

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

78) Suppose Lisa owns 1,000 shares of a corporation. Assume that four directors are to be elected to the board. With ________ voting, Lisa can multiply the number of shares she owns (1,000) by the number of directors to be elected (four), and she can cast all the resulting votes (4,000) for one candidate or split them among candidates as she determines.

  1. A) supramajority
  2. B) noncumulative
  3. C) cumulative
  4. D) preemptive

Answer:  C

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

79) The Merrick and Stanley Corporation has 28,000 outstanding shares. During a proposal for a merger, the shareholders decide to increase the quorum of the vote of shareholders to 75 percent, using the supramajority voting rule. How many minimum affirmative votes would be needed to pass the supramajority voting requirement?

  1. A) 14,001
  2. B) 21,280
  3. C) 21,000
  4. D) 28,000

Answer:  C

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

80) According to the Revised Model Business Corporation Act (RMBCA), what establishes a quorum to hold a meeting of the shareholders?

  1. A) a majority of the outstanding shares
  2. B) a majority of the unissued shares
  3. C) a majority of the treasury shares
  4. D) a majority of the liquidated shares

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

81) ________ is a system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open.

  1. A) Cumulative voting
  2. B) Straight voting
  3. C) Supramajority voting
  4. D) Trust voting

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

82) Which of the following is true about dividends?

  1. A) Dividends are paid at the discretion of the shareholders.
  2. B) Dividends cannot be used for corporate purposes.
  3. C) Dividends will be paid to shareholders who have sold their shares prior to the record date.
  4. D) Dividends in cash or property, once declared, cannot be revoked.

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

83) In which of the following cases can the alter ego doctrine be invoked in a corporate civil case?

  1. A) when shareholders bring a lawsuit on behalf of the corporation after the corporation failed to do so itself
  2. B) when unpaid creditors are trying to collect from shareholders a debt owed by the corporation
  3. C) when there is mismanagement of corporate stocks by the board of directors
  4. D) when shareholders are trying to collect for fraud committed by a third party

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

84) A member of the board of directors who is also an officer of the corporation is known as a(n) ________.

  1. A) inside director
  2. B) ombudsman
  3. C) registered agent
  4. D) shareholder

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

85) ________ are employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation.

  1. A) Corporate officers
  2. B) Shareholders
  3. C) Registered agents
  4. D) Ombudsmen

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

86) Which of the following policies helps keep a corporate officer from being sued for honest mistakes made on behalf of a corporation?

  1. A) the duty of loyalty
  2. B) the duty of obedience
  3. C) the business judgment rule
  4. D) self-dealing

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

87) A duty that requires directors and officers to not act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders is known as ________.

  1. A) the duty of care
  2. B) the duty of loyalty
  3. C) the duty of obedience
  4. D) self-dealing

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

88) Which of the following is true of cumulative voting?

  1. A) Each shareholder votes the number of shares he or she owns on candidates for each of the positions open for election.
  2. B) A majority shareholder always elects the entire board of directors.
  3. C) The cumulative voting method always applies to elections for the board of directors.
  4. D) A minority shareholder has a better opportunity to elect someone to the board of directors.

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

89) Which of the following constitutes a breach of the duty of loyalty by a corporate officer?

  1. A) straight voting
  2. B) cumulative voting
  3. C) piercing the corporate veil
  4. D) self-dealing

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

90) Helen is the vice-president of Gotspeed Corporation, a company that designs, manufactures and sells sports shoes. Nestor, an independent entrepreneur, designs a new shoe that helps the user's foot grip the shoe better, and he calls it the Anklator. Nestor's friend schedules an appointment for him to meet Helen and present the Anklator for possible adoption by Gotspeed. Instead of presenting the opportunity to Gotspeed's board of directors, Helen pays Nestor's asking price and purchases the Anklator design for herself. She then quits and forms her own company to manufacture and sell Anklator shoes. Helen has breached her duty of loyalty to Gotspeed Corporation by ________.

  1. A) self-dealing
  2. B) usurping a corporate opportunity
  3. C) making a secret profit
  4. D) competing with the corporation

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

 

91) Jameson works for Fishy-Mart Corporation, a chain of superstores that sells large quantities of seafood. His job is to locate future sites for Fishy-Mart stores. Jameson finds a piece of real estate near a coastline that would make a great site for a Fishy-Mart store. He asks his friend to purchase the property from its current owner and has a secret agreement with his friend to split the profits when he sells the property to Fishy-Mart. Jameson, without disclosing his interest in the property, recommends the site to Fishy-Mart, which then purchases the property from Jameson's friend. The friend splits the profits with Jameson. What breach of the duty of loyalty has Jameson committed?

  1. A) usurping a corporate opportunity
  2. B) self-dealing
  3. C) competing with the corporation
  4. D) proxy

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

92) Marshall is a purchasing agent for DigitoolArt Corporation. His duties require him to negotiate and execute contracts to purchase office supplies and equipment for the corporation. Assume that Bronson, a computer sales representative, pays Marshall a $20,000 kickback to purchase from him computers needed by DigitoolArt Corporation. What breach of the duty of loyalty has Marshall committed here?

  1. A) competing with the corporation
  2. B) making a secret profit
  3. C) self-dealing
  4. D) usurping a corporate opportunity

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Application of knowledge

Classification:  Application

 

93) The shareholders of a corporation act as agents of the corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

94) The annual shareholders' meeting is held to elect new shareholders.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

95) Shareholders do not have to attend a shareholders' meeting to vote.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

96) A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is known as cumulative voting.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

97) Once a quorum is present, the withdrawal of shares does not affect the quorum of the meeting.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

98) Straight voting gives a minority shareholder a better opportunity to elect someone to the board of directors.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

99) Shareholder resolutions are usually made when the corporation is soliciting proxies from its shareholders.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

100) The shareholders are responsible for determining how much will be paid in dividends.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

101) Once declared, a cash or property dividend cannot be revoked.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

102) A shareholder's authorization of another person to vote the shareholder's shares at a shareholders' meeting in the event of the shareholder's absence is known as a moxie.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

103) The election of directors of the corporation can be held by electronic transmission.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

104) The president of a corporation is an example of a corporate officer.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

105) The business judgment rule states that corporate directors and officers are liable to the corporation or its shareholders for even honest mistakes of judgment.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

106) The determination of whether a corporate director or officer has met his or her duty of care is measured in hindsight.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

107) The duty of loyalty requires directors and officers to subordinate their personal interests to those of the corporation and its shareholders.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

108) Secret profits obtained by a director or officer cannot be recovered by a corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

109) Usurping a corporate opportunity is a breach of the duty of loyalty that can only be committed by a shareholder.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

110) Fiduciary duties of directors and officers of a corporation include the duty of loyalty and the duty of care.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

111) A director or an officer who breaches the duty of care is personally liable to the corporation and its shareholders for any damages caused by the breach.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

112) The duty of care requires corporate directors and officers to use care and diligence when acting on behalf of the corporation.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

113) A shareholder's authorization of another person to vote the shareholder's shares at the shareholders' meetings in the event of the shareholder's absence is called a(n) ________.

Answer:  proxy

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

114) A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates is known as ________.

Answer:  cumulative voting

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

115) A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders is known as the ________ requirement.

Answer:  supramajority voting/ supermajority voting

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

116) ________ is a doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations.

Answer:  Piercing the corporate veil

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

117) A(n) ________ is a member of a board of directors who is not an officer of the corporation.

Answer:  outside director

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

118) A director or corporate officer who usurps a corporate opportunity would be violating the director's fiduciary duty called the ________.

Answer:  duty of loyalty

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

 

119) Explain the business judgment rule and its relationship to the fiduciary duty of care owed by corporate officers and directors.

Answer:  The determination of whether a corporate director or officer has met his or her duty of care is measured as of the time the decision is made; the benefit of hindsight is not a factor. Therefore, the directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment. This is called the business judgment rule. Were it not for the protection afforded by the business judgment rule, many high-risk but socially desirable endeavors might not be undertaken.

Diff: 1

Skill:  Legal Concepts

LO:  16.3 Explain the rights, duties, and liability of directors, officers, and shareholders.

AACSB:  Analytical thinking

Classification:  Concept

 

120) According to the provisions set forth by the Sarbanes-Oxley Act, the ________, a federal government agency, may issue an order prohibiting any person who has committed securities fraud from acting as an officer or a director of a public company.

  1. A) United States International Trade Commission
  2. B) Federal Reserve System
  3. C) Federal Communications Commission
  4. D) Securities and Exchange Commission

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

121) According to priority, which of the following claimants is the last to be paid after a corporation's assets have been liquidated?

  1. A) creditors
  2. B) common stockholders
  3. C) preferred shareholders
  4. D) bond holders

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

 

122) After a corporation has commenced business or issued shares, the corporation can be ________ if the board of directors recommends dissolution and a majority of voting shareholders favors dissolution.

  1. A) rescinded
  2. B) remanded
  3. C) administratively dissolved
  4. D) voluntarily dissolved

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

123) The Sarbanes-Oxley Act requires CEO and CFO certification for annual and quarterly reports.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

124) The Sarbanes-Oxley Act prohibits public companies from making personal loans to their directors or executive officers.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

125) Private companies and nonprofit organizations are also influenced by the Sarbanes-Oxley Act's accounting and corporate governance rules.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

 

126) A corporation is dissolved upon the effective date of the articles of dissolution.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

127) The ________ Act prohibits public companies from making personal loans to their directors or executive officers.

Answer:  Sarbanes-Oxley

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

128) Involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law is known as ________.

Answer:  administrative dissolution

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

129) Explain the concepts of winding up, liquidation, and termination.

Answer:  A dissolved corporation continues its corporate existence but may not carry on any business except as required to wind up and liquidate its business and affairs. In a voluntary dissolution, the liquidation is usually carried out by the board of directors. If the dissolution is involuntary or the dissolution is voluntary but the directors refuse to carry out the liquidation, a court appointed receiver carries out the winding up and liquidation of the corporation. Termination occurs only after the winding up of the corporation's affairs, the liquidation of its assets, and the distribution of the proceeds to the claimants. The liquidated assets are paid to claimants according to the following priority: (1) expenses of liquidation and creditors according to their respective liens and contract rights, (2) preferred shareholders according to their liquidation preferences and contract rights, and (3) common stockholders.

Diff: 1

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

 

130) Explain the CEO and CFO certification provision of the Sarbanes-Oxley Act (SOX) of 2002.

Answer:  The CEO and chief financial officer (CFO) of a public company must file a statement accompanying each annual and quarterly report, certifying that the signing officer has reviewed the report; that, based on the officer's knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact that would make the statement misleading; and that the financial statement and disclosures fairly present, in all material aspects, the operation and financial condition of the company. A knowing and willful violation is punishable by up to 20 years in prison and a monetary fine.

Diff: 2

Skill:  Legal Concepts

LO:  16.4 Describe how the Sarbanes-Oxley Act affects corporate governance.

AACSB:  Analytical thinking

Classification:  Concept

 

131) A corporation that uses subsidiary corporations to operate in more than one country cannot be termed as a multinational corporation.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  16.5 Describe the operation of multinational corporations.

AACSB:  Analytical thinking

Classification:  Concept

 

132) Many multinational corporations conduct business in another country by using a(n) ________.

Answer:  international subsidiary corporation

Diff: 1

Skill:  Legal Concepts

LO:  16.5 Describe the operation of multinational corporations.

AACSB:  Analytical thinking

Classification:  Concept

 

 

 

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Free Business Ethics Resources

1. See full list of videos: 

Link 1 - Youtube channel www.youtube.com/ecomftu2012

Link 2 - Youtube channel 

2. Free Business Ethics - 2016 Ebooks (free download)

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

 

3. Link to power point slides (Free Download)

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

LINK DOWNLOAD FREE PPT - LINK

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

LINK DOWNLOAD FREE PPT - LINK

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

4. Test Bank - Free download

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

Link - Test bank - free download 

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Link - Test bank - free download

 

For Test Bankz, Quiz Answers and Case study Guides, email to: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Good Luck and Success, Enjoy Your Study !

 

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Business Ethics 2016, Lecture, Video, Case Study Guides and Quiz, Test Bank, Free Download
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Revel for Ethics and the Conduct of Business, 8th Edition, 2016, John R Boatright, Jeffery D. Smith
Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman
Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

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1. Ethics in the World of Business
2. Ethical Decision Making
3. Ethical Theories
4. Whistle-Blowing
5. Business Information and Conflict of Interest
6. Privacy
7. Discrimination and Affirmative Action
8. Employment Rights
9. Health and Safety
10. Marketing and Advertising
11. Ethics in Finance
12. Corporate Social Responsibility
13. Governance, Accountability, and Compliance
14. International Business Ethics
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Part I: Legal and Ethical Environment

1. Legal Heritage and the Digital Age
2. Ethics and Social Responsibility of Business
3. Courts, Jurisdiction, and Administrative Law
4. Judicial, Alternative, and E-Dispute Resolution

Part II: Constitution and Public Law
5. Constitutional Law for Business and E-Commerce
6. Torts and Strict Liability
7. Criminal Law and Cyber Crimes
8. Intellectual Property and Cyber Piracy

Part III: Contracts, Commercial Law, and E-Commerce
9. Formation and Requirements of Contracts
10. Performance and Breach of Contracts
11. Digital Law and E-Commerce
12. UCC Sales Contracts, Leases, and Warranties
13. Credit, Secured Transactions, and Bankruptcy

Part IV: Business Organizations, Corporate Governance, and Investor Protection
14. Small Business, General Partnerships, and Limited Partnerships
15. Limited Liability Companies, Limited Liability Partnerships, and Special Forms of Business
16. Corporations and Corporate Governance
17. Investor Protection and E-Securities Transactions

Part V: Agency, Employment, and Labor Law
18. Agency Law
19. Equal Opportunity in Employment
20. Employment Law and Worker Protection
21. Labor Law and Immigration Law

Part VI: Government Regulation
22. Antitrust Law and Unfair Trade Practices
23. Consumer Protection
24. Environmental Protection
25. Real Property and Land Use Regulation

Part VII: Global Environment
26. International and World Trade Law

Part VIII: Accounting Profession
27. Accountants’ Duties and Liability
------
PART ONE Basic Principles

Chapter 1 Ethics and Business
Introduction
1.1 The Nature of Business Ethics
ON THE EDGE: Was National Semiconductor Morally Responsible?
1.2 Ethical Issues in Business
ON THE EDGE: A Traditional Business
1.3 Moral Responsibility and Blame
ON THE EDGE: WorldCom’s Whistleblower
ON THE EDGE: Gun Manufacturers and Responsibility
CASES FOR DISCUSSION
Slavery in the Chocolate Industry
Aaron Beam and the HealthSouth Fraud

Chapter 2 Ethical Principles in Business
Introduction
2.1 Utilitarianism: Weighing Social Costs and Benefits
2.2 Rights and Duties
ON THE EDGE: Should Companies Dump Their Wastes In Poor Countries?
ON THE EDGE: Working for Eli Lilly & Company
ON THE EDGE: Conflict Diamonds
ON THE EDGE: ExxonMobil, Amerada Hess, and Marathon Oil in Equatorial Guinea
CASES FOR DISCUSSION
Traidos Bank and Roche’s Drug Trials in China

PART TWO The Market and Business

Chapter 3 The Business System: Government, Markets, and International Trade
Introduction
3.1 Free Markets and Rights: John Locke
3.2 Free Markets and Utility: Adam Smith
3.3 Free Trade and Utility: David Ricardo
3.4 Marx and Justice: Criticizing Markets and Free Trade
ON THE EDGE: Commodification or How Free Should Free Markets Be?
ON THE EDGE: Marx’s Children
3.5 Conclusion: The Mixed Economy, the New Property, and the End of Marxism
ON THE EDGE: Napster’s Lost Revolution
ON THE EDGE: Brian’s Franchise
CASES FOR DISCUSSION
The GM Bailout Accolade versus Sega

Chapter 4 Ethics in the Marketplace
Introduction
4.1 Perfect Competition
4.2 Monopoly Competition
ON THE EDGE: Drug Company Monopolies and Profits
4.3 Oligopolistic Competition
4.4 Oligopolies and Public Policy
ON THE EDGE: Fixing the Computer Memory Market
ON THE EDGE: Oracle and Peoplesoft
CASES FOR DISCUSSION
Intel’s “Rebates” and Other Ways It “Helped” Customers
Archer Daniels Midland and the Friendly Competitors

PART THREE Business and Its External Exchanges: Ecology and Consumers

Chapter 5 Ethics and the Environment
Introduction
5.1 The Dimensions of Pollution and Resource Depletion
5.2 The Ethics of Pollution Control
5.3 The Ethics of Conserving Depletable Resources
ON THE EDGE: Ford’s Toxic Wastes
ON THE EDGE: The Auto Companies in China
ON THE EDGE: Exporting Poison
CASES FOR DISCUSSION
The Ok Tedi Copper Mine
Gas or Grouse?

Chapter 6 The Ethics of Consumer Production and Marketing
Introduction
6.1 Markets and Consumer Protection
6.2 The Contract View of Business Firm’s Duties to Consumers
6.3 The Due Care Theory
ON THE EDGE: The Tobacco Companies and Product Safety
6.4 The Social Costs View of the Manufacturer’s Duties
ON THE EDGE: Selling Personalized Genetics
6.5 Advertising Ethics
ON THE EDGE: Advertising Death to Kids?
ON THE EDGE: New Balance and the “Made in USA” Label
6.6 Consumer Privacy
CASES FOR DISCUSSION
Becton Dickinson and Needle Sticks
Reducing Debts at Credit Solutions of America

PART FOUR Business and Its Internal Constituencies

Chapter 7 The Ethics of Job Discrimination
Introduction
7.1 Job Discrimination: Its Nature
ON THE EDGE: Helping Patients at Plainfield Healthcare Center
7.2 Discrimination: Its Extent
7.3 DISCRIMINATION: UTILITY, RIGHTS, AND JUSTICE
7.4 Affirmative Action
ON THE EDGE: Driving for Old Dominion
ON THE EDGE: Peter Oiler and Winn-Dixie Stores
CASES FOR DISCUSSION
Should Kroger pay now for what a Ralphs’ Employee did in the Past
Wal-Mart’s Women

Chapter 8 Ethics and the Employee
Introduction
8.1 The Rational Organization
8.2 The Political Organization
8.3 The Caring Organization
ON THE EDGE: HP’s Secrets and Oracle’s New Hire
ON THE EDGE: Insider Trading or: What Are Friends For?
ON THE EDGE: Delivering Pizza
ON THE EDGE: Sergeant Quon’s Text Messages
ON THE EDGE: Employment at Will at Howmet Corporation?
CASES FOR DISCUSSION
Death at Massey Energy Company
Who Should Pay?
------
key words
Ethics,
Ethical Decision Making,
Ethical Theories,
Whistle-Blowing,
Conflict of Interest,
Privacy,
Discrimination, Affirmative Action,
Employment Rights,
Health and Safety,
Ethics in Finance,
Corporate Social Responsibility,
Governance, Accountability, Compliance,
International Business Ethics,

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