Select the best answer $(50$ points$)$

$1.$ 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.

$2.$ A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

a$.$ corporation is organized for the purpose of making a profit.

b$.$ corporation is subject to more federal and state government regulations.

c$.$ corporation is an accounting economic entity.

d$.$ corporation$$s temporary accounts are closed at the end of the accounting period.

$3.$ Which one of the following would not be considered an advantage of the corporate form of organization?

a$.$ Limited liability of owners

b$.$ Separate legal existence

c$.$ Continuous life

d$.$ Government regulation

$4.$ 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.

$5.$ 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.

$6.$ 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.

$7.$ 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.

$8.$ Andy Eggers has invested $$150,000$ in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Eggers stand to lose?

a$.$ Up to his total investment of $$150,000.$

b$.$ Zero.

c$.$ The $$150,000$ plus any personal assets the creditors demand.

d$.$ $$100,000.$

$9.$ 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 from the board of directors before selling shares.

d$.$ A stockholder must obtain permission from at least three other stockholders before selling shares.

$10.$ A corporate board of directors does not generally

a$.$ select officers.

b$.$ formulate operating policies.

c$.$ declare dividends.

d$.$ execute policy.

$11.$ 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.

$12.$ 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

$13.$ What is ordinarily the first step in the formation of a corporation?

a$.$ Development of by$-$laws for the corporation

b$.$ Issuance of the corporate charter

c$.$ Application for incorporation to the appropriate Secretary of State

d$.$ Registration with the SEC

$14.$ 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

$15.$ A corporation whose stock is regularly traded on a national securities exchange is a

a$.$ Privately held corporation.

b$.$ Publicly held corporation.

c$.$ closely held corporation.

d$.$ legally held corporation.

$16.$ If a corporation has only one class of stock, it is referred to as

a$.$ classless stock.

b$.$ preferred stock.

c$.$ solitary stock.

d$.$ common stock.

$17.$ The term residual claim refers to a stockholders$$ right to

a$.$ receive dividends.

b$.$ share in assets upon liquidation.

c$.$ acquire additional shares when offered.

d$.$ elect a board of directors.

$18.$ The authorized stock of a corporation

a$.$ only reflects the initial capital needs of the company.

b$.$ is indicated in its by$-$laws.

c$.$ is indicated in its charter.

d$.$ must be recorded in a formal accounting entry.

$19.$ Retained earnings

a$.$ is unique to the corporate form of business.

b$.$ is an optional account in the partnership form of business.

c$.$ reflects cash paid in by stockholders to date.

d$.$ is closed at the end of the year.

$20.$ Dividends are declared out of

a$.$ Capital Stock.

b$.$ Paid$-$in Capital in Excess of Par.

c$.$ Retained Earnings.

d$.$ Treasury Stock.