Corporate Dissolution Quiz
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Questions and Answers

What form must a dissolving corporation file with the IRS?

  • Form 941
  • Form 1099
  • Form 966 (correct)
  • Form 1040

    • In Florida, how long does a corporation have to revoke its dissolution after voluntarily dissolving?

  • 90 days
  • 60 days
  • 120 days (correct)
  • 180 days

    • Who can initiate a judicial dissolution of a corporation?

  • CEO and CFO
  • Employees
  • Shareholders and creditors (correct)
  • Board of directors

    • 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?

    <p>Derivative shareholder action</p> Signup and view all the answers

    What are the three main causes of derivative shareholder actions?

    <p>Breach of fiduciary duty, fraud, and mismanagement</p> Signup and view all the answers

    What is the term for a suit that may be brought if an individual shareholder is injured by an action of the corporation?

    <p>Direct shareholder action</p> Signup and view all the answers

    What are shareholders allowed to inspect?

    <p>Corporate minutes, accounting records, and shareholder records</p> Signup and view all the answers

    Under what circumstances may a court dissolve a corporation on its own initiative?

    <p>If the court believes the corporation exceeded or abused authority conferred upon it by law or has perpetrated fraud</p> Signup and view all the answers

    What is the term for a suit that may be brought when numerous parties have the same claim against a corporation?

    <p>Class action lawsuit</p> Signup and view all the answers

    What form is filed with the IRS by a dissolving corporation?

    <p>Form 966</p> Signup and view all the answers

    What is stock sold for less than par value referred to as?

    <p>Watered stock</p> Signup and view all the answers

    What are shares that are not fully paid referred to as?

    <p>Assessable</p> Signup and view all the answers

    What account represents the permanent investment capital of a corporation?

    <p>Stated capital account</p> Signup and view all the answers

    What is the term for the total dollar market value of all of a corporation’s outstanding shares?

    <p>Market capitalization</p> Signup and view all the answers

    In Florida, the name of a dissolved corporation cannot be used by another corporation for how long?

    <p>One year</p> Signup and view all the answers

    What is the typical maximum period for a voting trust?

    <p>Ten years</p> Signup and view all the answers

    In Florida, a corporation may be administratively dissolved if it is without a registered agent or registered office for how long?

    <p>30 days or more</p> Signup and view all the answers

    What chapter of the Florida Statutes governs corporations?

    <p>Chapter 607</p> Signup and view all the answers

    What is the tax rate for the Florida documentary stamp tax on the issuance of corporate stock?

    <p>$.35 for each $100 or fraction thereof of the value of the stock</p> Signup and view all the answers

    What is the name of the reserve account set aside by a corporation for the future redemption of stock?

    <p>Sinking fund</p> Signup and view all the answers

    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?

    <p>Cumulative preferred stock</p> Signup and view all the answers

    What are the two exceptions to the requirement of shareholder vote on a merger?

    <p>Small-impact merger and short-form merger</p> Signup and view all the answers

    What are the two major types of equity securities?

    <p>Common stock and preferred stock</p> Signup and view all the answers

    What is the term for the number of shares sold to shareholders?

    <p>Issued shares</p> Signup and view all the answers

    What is stock issued without stock certificates referred to as?

    <p>Uncertified shares</p> Signup and view all the answers

    What is another name for the income statement?

    <p>Profit and loss statement</p> Signup and view all the answers

    What action is typically taken to increase the price of shares?

    <p>Reverse stock split</p> Signup and view all the answers

    What is the term used for a subdivision of a class of stock?

    <p>Series</p> Signup and view all the answers

    What is the term for the procedure that allows a corporation to become a different type of business entity?

    <p>Conversion</p> Signup and view all the answers

    What is the term used when a parent corporation is merged into a subsidiary?

    <p>Downstream merger</p> Signup and view all the answers

    What is the first thing that should be done at any corporate meeting?

    <p>Pass a corporate resolution</p> Signup and view all the answers

    What are the two major types of shareholder voting agreements?

    <p>Voting trust and pooling agreement</p> Signup and view all the answers

    What is the term for an unsecured debt instrument?

    <p>Debenture</p> Signup and view all the answers

    What is the interest rate paid on a bond referred to as?

    <p>Coupon rate</p> Signup and view all the answers

    What is a discounted bond?

    <p>A bond paid less than the full face value</p> Signup and view all the answers

    What is a zero coupon bond?

    <p>A bond with no interest until maturity</p> Signup and view all the answers

    What is the most common structural change in a corporation?

    <p>Amendment of the articles of incorporation</p> Signup and view all the answers

    If a plan of merger is approved, what must the surviving corporation file with its state of domicile?

    <p>Articles of merger</p> Signup and view all the answers

    What consolidates all past amendments with original articles of incorporation into a new document?

    <p>Restated articles of incorporation</p> Signup and view all the answers

    Shareholders purchasing shares become holders of equity securities.

    <p>True</p> Signup and view all the answers

    Stock sold for less than par value is called fractional stock.

    <p>False</p> Signup and view all the answers

    Authorized shares refers to the number of shares sold to shareholders.

    <p>False</p> Signup and view all the answers

    A cash dividend is the most common corporate distribution.

    <p>True</p> Signup and view all the answers

    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.

    <p>True</p> Signup and view all the answers

    A property dividend is reported to the IRS based on the book value.

    <p>False</p> Signup and view all the answers

    Bonds and debentures are types of equity securities.

    <p>False</p> Signup and view all the answers

    Treasury shares cannot receive dividends.

    <p>True</p> Signup and view all the answers

    Market capitalization is the total dollar market value of all of a corporation’s outstanding shares.

    <p>True</p> Signup and view all the answers

    A share dividend changes the proportionate stock ownership of each shareholder.

    <p>False</p> Signup and view all the answers

    The two major types of equity securities a corporation may issue are common stock and preferred stock.

    <p>True</p> Signup and view all the answers

    Preferred stock may be subject to certain limitations.

    <p>True</p> Signup and view all the answers

    Ex-dividend is paid to the shareholder who purchases stock after a dividend is declared.

    <p>False</p> Signup and view all the answers

    Share dividends are taxable at the time the shareholder receives the shares.

    <p>False</p> Signup and view all the answers

    A debenture is a secured debt instrument.

    <p>False</p> Signup and view all the answers

    Each series of stock can have different rights and limitations as long as they are identical for all shares within a series.

    <p>True</p> Signup and view all the answers

    Holders of common stock have voting, dividend, and liquidation rights, but not option rights.

    <p>True</p> Signup and view all the answers

    Scrip represents a percentage of a full share.

    <p>False</p> Signup and view all the answers

    Reverse stock splits are used to increase the price of shares, not lower it.

    <p>True</p> Signup and view all the answers

    The date upon which the principal is returned to the bondholder is the maturity date, not the date upon which interest is paid.

    <p>True</p> Signup and view all the answers

    Nonqualified stock options receive special tax treatment, but incentive stock options do not.

    <p>False</p> Signup and view all the answers

    Corporate accounting typically divides capital into stated capital, capital surplus, and earned surplus, not earned surplus, retained earnings, and capital surplus.

    <p>False</p> Signup and view all the answers

    A stock split is a taxable event to the shareholder until the shareholder sells the shares of stock.

    <p>False</p> Signup and view all the answers

    A debt security holder has the right to participate in the management of the corporation and to receive profits.

    <p>False</p> Signup and view all the answers

    Stock sold for less than par value is referred to as this

    <p>watered stock</p> Signup and view all the answers

    If shares that are not fully paid are issued, they are referred to as this

    <p>assessable</p> Signup and view all the answers

    This account represents the permanent investment capital of a corporation

    <p>stated capital account</p> Signup and view all the answers

    This is the term for the total dollar market value of all of a corporation’s outstanding shares

    <p>market capitalization</p> Signup and view all the answers

    In Florida, the name of a dissolved corporation cannot be used by another corporation for this time period

    <p>one year</p> Signup and view all the answers

    Shareholders may inspect these three corporate records.

    <p>What are 1) corporate minutes, 2) accounting records, and 3) shareholder records</p> Signup and view all the answers

    This is the term for a suit that may be brought when you have numerous parties who have the same claim against a corporation.

    <p>What is a representative shareholder action</p> Signup and view all the answers

    This is the term for a suit that may be brought if an individual shareholder is injured by an action of the corporation.

    <p>What is a direct shareholder action</p> Signup and view all the answers

    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.

    <p>What is a derivative shareholder action</p> Signup and view all the answers

    These are the three main causes of derivative shareholder actions.

    <p>What are 1) breach of fiduciary duty, 2) corporate waste, and 3) illegal conduct</p> Signup and view all the answers

    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

    <p>articles of domestication</p> Signup and view all the answers

    These are the two exceptions to the requirement of shareholder vote on a merger

    <p>a small-impact merger and a short-form merger</p> Signup and view all the answers

    These are the two major types of equity securities

    <p>common stock and preferred stock</p> Signup and view all the answers

    This term refers to the number of shares sold to shareholders

    <p>issued shares</p> Signup and view all the answers

    Stock issued without stock certificates is referred to as this

    <p>uncertified shares</p> Signup and view all the answers

    Any action taken at a corporate meeting requires _________.

    <p>corporate resolution</p> Signup and view all the answers

    Make a determination that the requisite quorum is present to conduct business

    <p>articles of incorporation</p> Signup and view all the answers

    A voting trust and a pooling agreement is called.

    <p>Record date</p> Signup and view all the answers

    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.

    <p>True</p> Signup and view all the answers

    A property dividend is reported to the IRS based on the book value.

    <p>False</p> Signup and view all the answers

    Bonds and debentures are types of equity securities.

    <p>False</p> Signup and view all the answers

    A cash dividend is the most common corporate distribution.

    <p>True</p> Signup and view all the answers

    Market capitalization is the total dollar market value of all of a corporation’s outstanding shares.

    <p>True</p> Signup and view all the answers

    Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.

    <p>True</p> Signup and view all the answers

    Debenture is a secured debt instrument.

    <p>False</p> Signup and view all the answers

    Holders of common stock have option rights.

    <p>False</p> Signup and view all the answers

    Scrip represents a percentage of a full share.

    <p>True</p> Signup and view all the answers

    Reverse stock splits are used to increase the price of shares, not lower it.

    <p>True</p> Signup and view all the answers

    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.

    <p>True</p> Signup and view all the answers

    A property dividend is reported to the IRS based on the book value.

    <p>False</p> Signup and view all the answers

    Bonds and debentures are types of equity securities.

    <p>False</p> Signup and view all the answers

    Preferred stock may be subject to certain limitations.

    <p>True</p> Signup and view all the answers

    A stock split is a taxable event to the shareholder until the shareholder sells the shares of stock.

    <p>False</p> Signup and view all the answers

    Ex-dividend is paid to the former owner, not to the shareholder who purchases stock after a dividend is declared.

    <p>True</p> Signup and view all the answers

    Share dividends are non-taxable at the time the shareholder receives the shares.

    <p>True</p> Signup and view all the answers

    A debenture is an unsecured debt instrument, not a secured one.

    <p>True</p> Signup and view all the answers

    Each series of stock can have different rights and limitations, as long as they are identical for all shares within a series.

    <p>True</p> Signup and view all the answers

    Reverse stock splits are used to increase the price of shares, not lower it.

    <p>True</p> Signup and view all the answers

    This is a term for a disproportionate debt to equity ratio.

    <p>Thin Incorporation</p> Signup and view all the answers

    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.

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    Description

    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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