102 Questions
What form must a dissolving corporation file with the IRS?
Form 966
In Florida, how long does a corporation have to revoke its dissolution after voluntarily dissolving?
120 days
Who can initiate a judicial dissolution of a corporation?
Shareholders and creditors
What is the term for a suit brought by one or more shareholders to enforce a right or remedy of the corporation when the officers fail to take action?
Derivative shareholder action
What are the three main causes of derivative shareholder actions?
Breach of fiduciary duty, fraud, and mismanagement
What is the term for a suit that may be brought if an individual shareholder is injured by an action of the corporation?
Direct shareholder action
What are shareholders allowed to inspect?
Corporate minutes, accounting records, and shareholder records
Under what circumstances may a court dissolve a corporation on its own initiative?
If the court believes the corporation exceeded or abused authority conferred upon it by law or has perpetrated fraud
What is the term for a suit that may be brought when numerous parties have the same claim against a corporation?
Class action lawsuit
What form is filed with the IRS by a dissolving corporation?
Form 966
What is stock sold for less than par value referred to as?
Watered stock
What are shares that are not fully paid referred to as?
Assessable
What account represents the permanent investment capital of a corporation?
Stated capital account
What is the term for the total dollar market value of all of a corporation’s outstanding shares?
Market capitalization
In Florida, the name of a dissolved corporation cannot be used by another corporation for how long?
One year
What is the typical maximum period for a voting trust?
Ten years
In Florida, a corporation may be administratively dissolved if it is without a registered agent or registered office for how long?
30 days or more
What chapter of the Florida Statutes governs corporations?
Chapter 607
What is the tax rate for the Florida documentary stamp tax on the issuance of corporate stock?
$.35 for each $100 or fraction thereof of the value of the stock
What is the name of the reserve account set aside by a corporation for the future redemption of stock?
Sinking fund
Holders of this stock are entitled to back payments of missed dividends if the board of directors fails to distribute dividends in a particular quarter. What is this stock?
Cumulative preferred stock
What are the two exceptions to the requirement of shareholder vote on a merger?
Small-impact merger and short-form merger
What are the two major types of equity securities?
Common stock and preferred stock
What is the term for the number of shares sold to shareholders?
Issued shares
What is stock issued without stock certificates referred to as?
Uncertified shares
What is another name for the income statement?
Profit and loss statement
What action is typically taken to increase the price of shares?
Reverse stock split
What is the term used for a subdivision of a class of stock?
Series
What is the term for the procedure that allows a corporation to become a different type of business entity?
Conversion
What is the term used when a parent corporation is merged into a subsidiary?
Downstream merger
What is the first thing that should be done at any corporate meeting?
Pass a corporate resolution
What are the two major types of shareholder voting agreements?
Voting trust and pooling agreement
What is the term for an unsecured debt instrument?
Debenture
What is the interest rate paid on a bond referred to as?
Coupon rate
What is a discounted bond?
A bond paid less than the full face value
What is a zero coupon bond?
A bond with no interest until maturity
What is the most common structural change in a corporation?
Amendment of the articles of incorporation
If a plan of merger is approved, what must the surviving corporation file with its state of domicile?
Articles of merger
What consolidates all past amendments with original articles of incorporation into a new document?
Restated articles of incorporation
Shareholders purchasing shares become holders of equity securities.
True
Stock sold for less than par value is called fractional stock.
False
Authorized shares refers to the number of shares sold to shareholders.
False
A cash dividend is the most common corporate distribution.
True
Shareholders of a Subchapter S corporation must report and pay taxes upon their proportionate share of the corporation’s entire income, regardless of whether they have received distributions.
True
A property dividend is reported to the IRS based on the book value.
False
Bonds and debentures are types of equity securities.
False
Treasury shares cannot receive dividends.
True
Market capitalization is the total dollar market value of all of a corporation’s outstanding shares.
True
A share dividend changes the proportionate stock ownership of each shareholder.
False
The two major types of equity securities a corporation may issue are common stock and preferred stock.
True
Preferred stock may be subject to certain limitations.
True
Ex-dividend is paid to the shareholder who purchases stock after a dividend is declared.
False
Share dividends are taxable at the time the shareholder receives the shares.
False
A debenture is a secured debt instrument.
False
Each series of stock can have different rights and limitations as long as they are identical for all shares within a series.
True
Holders of common stock have voting, dividend, and liquidation rights, but not option rights.
True
Scrip represents a percentage of a full share.
False
Reverse stock splits are used to increase the price of shares, not lower it.
True
The date upon which the principal is returned to the bondholder is the maturity date, not the date upon which interest is paid.
True
Nonqualified stock options receive special tax treatment, but incentive stock options do not.
False
Corporate accounting typically divides capital into stated capital, capital surplus, and earned surplus, not earned surplus, retained earnings, and capital surplus.
False
A stock split is a taxable event to the shareholder until the shareholder sells the shares of stock.
False
A debt security holder has the right to participate in the management of the corporation and to receive profits.
False
Stock sold for less than par value is referred to as this
watered stock
If shares that are not fully paid are issued, they are referred to as this
assessable
This account represents the permanent investment capital of a corporation
stated capital account
This is the term for the total dollar market value of all of a corporation’s outstanding shares
market capitalization
In Florida, the name of a dissolved corporation cannot be used by another corporation for this time period
one year
Shareholders may inspect these three corporate records.
What are 1) corporate minutes, 2) accounting records, and 3) shareholder records
This is the term for a suit that may be brought when you have numerous parties who have the same claim against a corporation.
What is a representative shareholder action
This is the term for a suit that may be brought if an individual shareholder is injured by an action of the corporation.
What is a direct shareholder action
This is the term for a suit brought by one or more shareholders to enforce a right or remedy of the corporation when the officers of the corporation who would normally bring such a suit fail or refuse to take action.
What is a derivative shareholder action
These are the three main causes of derivative shareholder actions.
What are 1) breach of fiduciary duty, 2) corporate waste, and 3) illegal conduct
Whenever a corporation has been formed in one state and prefers to be governed by the laws of another state, it changes its state of domicile by filing this
articles of domestication
These are the two exceptions to the requirement of shareholder vote on a merger
a small-impact merger and a short-form merger
These are the two major types of equity securities
common stock and preferred stock
This term refers to the number of shares sold to shareholders
issued shares
Stock issued without stock certificates is referred to as this
uncertified shares
Any action taken at a corporate meeting requires _________.
corporate resolution
Make a determination that the requisite quorum is present to conduct business
articles of incorporation
A voting trust and a pooling agreement is called.
Record date
Shareholders of a Subchapter S corporation must report and pay taxes upon their proportionate share of the corporation’s entire income, regardless of whether they have received distributions.
True
A property dividend is reported to the IRS based on the book value.
False
Bonds and debentures are types of equity securities.
False
A cash dividend is the most common corporate distribution.
True
Market capitalization is the total dollar market value of all of a corporation’s outstanding shares.
True
Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.
True
Debenture is a secured debt instrument.
False
Holders of common stock have option rights.
False
Scrip represents a percentage of a full share.
True
Reverse stock splits are used to increase the price of shares, not lower it.
True
Shareholders of a Subchapter S corporation must report and pay taxes upon their proportionate share of the corporation’s entire income, regardless of whether they have received distributions.
True
A property dividend is reported to the IRS based on the book value.
False
Bonds and debentures are types of equity securities.
False
Preferred stock may be subject to certain limitations.
True
A stock split is a taxable event to the shareholder until the shareholder sells the shares of stock.
False
Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.
True
Share dividends are non-taxable at the time the shareholder receives the shares.
True
A debenture is an unsecured debt instrument, not a secured one.
True
Each series of stock can have different rights and limitations, as long as they are identical for all shares within a series.
True
Reverse stock splits are used to increase the price of shares, not lower it.
True
This is a term for a disproportionate debt to equity ratio.
Thin Incorporation
Study Notes
Summary of Stock and Corporate Finance Facts
- Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.
- Share dividends are non-taxable at the time the shareholder receives the shares.
- A debenture is an unsecured debt instrument, not a secured one.
- Each series of stock can have different rights and limitations, as long as they are identical for all shares within a series.
- Holders of common stock have voting, dividend, and liquidation rights, not option rights.
- Scrip represents a percentage of a full share.
- Reverse stock splits are used to increase the price of shares, not lower it.
- The date upon which the principal is returned to the bondholder is the maturity date, not the date upon which interest is paid.
- Nonqualified stock options do not receive special tax treatment, but incentive stock options do.
- Corporate accounting typically divides capital into stated capital, capital surplus, and earned surplus, not earned surplus, retained earnings, and capital surplus.
- A stock split is a non-taxable event to the shareholder until the shareholder sells the shares of stock.
- A debt security holder has no right to participate in the management of the corporation nor to receive profits.
Summary of Stock and Corporate Finance Facts
- Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.
- Share dividends are non-taxable at the time the shareholder receives the shares.
- A debenture is an unsecured debt instrument, not a secured one.
- Each series of stock can have different rights and limitations, as long as they are identical for all shares within a series.
- Holders of common stock have voting, dividend, and liquidation rights, not option rights.
- Scrip represents a percentage of a full share.
- Reverse stock splits are used to increase the price of shares, not lower it.
- The date upon which the principal is returned to the bondholder is the maturity date, not the date upon which interest is paid.
- Nonqualified stock options do not receive special tax treatment, but incentive stock options do.
- Corporate accounting typically divides capital into stated capital, capital surplus, and earned surplus, not earned surplus, retained earnings, and capital surplus.
- A stock split is a non-taxable event to the shareholder until the shareholder sells the shares of stock.
- A debt security holder has no right to participate in the management of the corporation nor to receive profits.
Summary of Stock and Corporate Finance Facts
- Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.
- Share dividends are non-taxable at the time the shareholder receives the shares.
- A debenture is an unsecured debt instrument, not a secured one.
- Each series of stock can have different rights and limitations, as long as they are identical for all shares within a series.
- Holders of common stock have voting, dividend, and liquidation rights, not option rights.
- Scrip represents a percentage of a full share.
- Reverse stock splits are used to increase the price of shares, not lower it.
- The date upon which the principal is returned to the bondholder is the maturity date, not the date upon which interest is paid.
- Nonqualified stock options do not receive special tax treatment, but incentive stock options do.
- Corporate accounting typically divides capital into stated capital, capital surplus, and earned surplus, not earned surplus, retained earnings, and capital surplus.
- A stock split is a non-taxable event to the shareholder until the shareholder sells the shares of stock.
- A debt security holder has no right to participate in the management of the corporation nor to receive profits.
Test your knowledge of corporate dissolution with this quiz. Explore concepts like plan of liquidation, court-initiated dissolution, and the parties who can initiate judicial dissolution. Perfect for anyone studying business law or corporate governance.
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