Multiple-Choice Questions

1. A promoter is liable for any contract he signs on behalf of a corporation before it is formed, unless:

A. The corporation adopts the contract.

B. The promoter notifies the other party that the corporation has not yet been formed.

C. The promoter signs the contract on behalf of the corporation.

D. The promoter forms the corporation within 72 hours of signing the contract.

E. The other party agrees to a novation.

2. CPA QUESTION: A corporate stockholder is entitled to which of the following rights?

A. Elect officers

B. Receive annual dividends

C. Approve dissolution

D. Prevent corporate borrowing

3. CPA QUESTION: Generally, a corporation’s articles of incorporation must include all of the following except:

A. The name of the corporation’s registered agent

B. The name of each incorporator

C. The number of authorized shares

D. Quorum requirements

4. Generally, a corporation’s bylaws include all of the following except:

A. Par value of the stock

B. The date of the shareholders meeting

C. The number of directors

D. The titles of officers

E. The date of the fiscal year

5. Under the duty of care, directors will be liable if they:

A. Make a decision that has a rational business purpose

B. Use the same care as an ordinarily prudent person

C. Make informed decisions

D. Engage in illegal behavior that is profitable to the company

E. Make an informed decision that ultimately harms the company