FINAL

Question 0

Three reasons why a person would want to incorporate a buisness.

Answer 0

Limited Liability
Easier to raise capital
Better succession of ownership

Question 1

Define Corporation

Answer 1

A separate legal entity

Question 2

Three pieces of information needed to incorporate a buisness.

Answer 2

Name
Purpose
Structure of capital

Question 3

Define domestic corporation

Answer 3

An instate corporatino

Question 4

Define foreign corporation

Answer 4

A corporation authorized to do business in a state but not incorporated in the state

Question 5

Define close corporation

Answer 5

Hard to get ownership in corporatino

Question 6

What is an Eleemosynary corporation?

Answer 6

Not for profit

Profit stays within corporation

Question 7

Define Subchapter S corporation

Answer 7

A corporation taxed like a partnership

Question 8

Define treasury stock

Answer 8

Stock that has been bought by the corporation

Question 9

Does treasury stock vote and pay dividends?

Answer 9

No

Question 10

Why would a company want to buy treasury stock?

Answer 10

To avoid paying dividends

Question 11

Define ultra vires act

Answer 11

Something that goes beyond the authority of the corporation
Would put the corporation at risk of “piercing the veil”
Anything illegal is an ultra fires act

Question 12

What is the reasonable business judgment rule?

Answer 12

Protects board members so long as they do not do anything illegal

Question 13

Define prospectus

Answer 13

A pamphlet/magazine/catalog that is distributed to new shareholders that should answer all legitimate questions about the corporation

Question 14

Define bond

Answer 14

A long term debt

Question 15

Why would a company sell stock instead of bonds?

Answer 15

Interest must be paid on bonds

Question 16

Properties of stock

Answer 16

Not tax deductible
Votes
Dividend is not guaranteed

Question 17

Properties of bonds

Answer 17

Interest is tax deductible
No vote
At maturity the payment is gone

Question 18

Properties of common stock

Answer 18

Votes

Generally Less expensive

Question 19

Properties of preferred stock

Answer 19

Paid first generally more expensive

Question 20

What is cumulative preferred stock?

Answer 20

Stock where the unpaid dividend accumulates

Question 21

Define participating preferred stock

Answer 21

Votes

Question 22

Define convertible preferred stock

Answer 22

Con convert into common stock

Question 23

Define preemptive right

Answer 23

Before a corporation offers new shares to public, shares must be offered in to all owners in order for them to maintain their percentage

Question 24

Define proxy

Answer 24

A representative who you give your voting rights

Question 25

When is cumulative voting allowed

Answer 25

To elect a new board of directors

Question 26

Define investment contract

Answer 26

Investment of money in a common enterprise with the expectation of future profit off the work of someone else

Question 27

What is the purpose of the securities act of 1933

Answer 27

Full disclosure

Question 28

Which market is the Securities Act of 1933?

Answer 28

Primary market

Question 29

What are two issues of stock exempt from the Securities Act of 1933?

Answer 29

Short-term investments | Intrastate issues

Question 30

What is the purpose of the Securities Exchange Act of 1934?

Answer 30

Fraud Prevention

Question 31

Which market is the Securities Exchange Act of 1934 in?

Answer 31

Secondary

Question 32

What is an accredited investor?

Answer 32

Buyer who is on an equal level with the buyer

Question 33

What is the purpose of Sarbanes-Oxley?

Answer 33

Have the chief officers sign off on financial statements to protect investors

Question 34

Define insider trading

Answer 34

Trading on information not known to the general public

Question 35

What is short swing profit?

Answer 35

A profit on a stock that occurred in less than 6 months by an officer/director/large shareholder and is assumed to be insider trading

Question 36

Define secured transaction

Answer 36

A transaction that has a security interest

Question 37

Define collateral

Answer 37

Property that is subject to the lien

Question 38

What are three things needed for attachment to take place?

Answer 38

Security agreement Value Debtor has rights in collateral

Question 39

Define perfected security interest

Answer 39

A security interest that gives certain rights to the creditor

Question 40

Define right to redemption

Answer 40

Previous owner of foreclosed property has first right to buy back the property

Question 41

Define financing statement

Answer 41

The financial statements of a company

Question 42

In what order is post disposition accounting paid?

Answer 42

Expenses Debt Other debts Excess to debtor

Question 43

Define Surityship

Answer 43

An agency relationship

Question 44

Define Right of Subrogation

Answer 44

Gives the surety all the rights of the creditor

Question 45

Who is entitled to a mechanic's lien?

Answer 45

The person who supplied labor or materials

Question 46

Define agency

Answer 46

Where one party represents another party

Question 47

What is the difference between an independent contractor and an agent?

Answer 47

Agent: employed by company and more control Independent contractor: given a job and less control

Question 48

Why type of relationship does a principal have toward an agent?

Answer 48

Fiduciary

Question 49

Define power of attorney

Answer 49

A written agency agreement

Question 50

What is the purpose of the uniform durable power of attorney act?

Answer 50

Makes a durable power of attorney last beyond death or mental incompetence

Question 51

Define vicarious liability

Answer 51

When you are liable for someone else's actions

Question 52

Define Partnership

Answer 52

Where two or more people join in business to make a profit

Question 53

How is a partnership taxed by the federal government?

Answer 53

A partnership is a pass through organization

Question 54

What is a 1065?

Answer 54

An informational tax return

Question 55

What is a K-1?

Answer 55

A tax return like a W2 but for a business owner

Question 56

When a partnership is terminated, how are the assets distributed?

Answer 56

Liabilities to non-partners Refund advances Return capital Excess profits to partners

Question 57

What is joint and several liability?

Answer 57

A lawsuit can get the money from any or all party members

Question 58

Define limited partnership

Answer 58

At least 1 general partner | At least 1 limited partner