Financial Accounting Tools For Business Decision Making 6th Canadian Edition By Paul – Test Bank
MULTIPLE CHOICE QUESTIONS
39. Under the corporate form of business organization
(a) a shareholder is personally liable for the debts of the corporation.
(b) a shareholder’s acts can bind the corporation even though he/she has not been appointed as an agent of the corporation.
(c) the corporation’s life is continuous.
(d) shareholders wishing to sell their shares must get the approval of other shareholders.
40. Shareholders directly elect the corporation’s
(b) board of directors.
41. Those most responsible for the major policy decisions of a corporation are the
(b) board of directors.
42. Which one of the following would not be considered an advantage of the corporate form of organization?
(a) limited liability of shareholders
(b) separate legal existence
(c) continuous life
(d) government regulation
43. The two ways that a corporation can be classified by ownership are
(a) publicly held and privately held.
(b) shares and non-shares.
(c) federal and provincial.
(d) majority and minority.
44. 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 Toronto 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.
45. 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 shareholders bind the corporation.
(d) It may enter into binding legal contracts in its own name.
46. Ford Harrison has invested $650,000 in a corporation. The corporation does not do well and must declare bankruptcy. What amount does Harrison stand to lose?
(a) up to his total investment of $650,000
(c) the $650,000 plus any personal assets the creditors demand
47. Which of the following statements reflects the transferability of ownership rights in a corporation?
(a) If a shareholder decides to transfer ownership, he/she must transfer all of his/her shares.
(b) A shareholder may dispose of part or all of his/her shares.
(c) A shareholder must obtain permission of the board of directors before selling shares.
(d) A shareholder must obtain permission from at least three other shareholders before selling shares.
48. A corporate board of directors does not generally
(a) select officers.
(b) formulate operating policies.
(c) declare dividends.
(d) execute policy.
49. Limited liability of shareholders means
(a) dividends will be paid regardless of profits.
(b) creditors have no legal claim on a shareholder’s personal assets.
(c) the life of the corporation is limited.
(d) deferral or reduction of taxes.
50. 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 proprietorship