BLAW 3301: Brief Hypotheticals 18.1
Final Exam Questions and All Correct
Answers 2025-2026 Updated.
Tammi purchases stock in Vivaldi Corporation. Vivaldi Corporation later encounters legal issues
and faces significant legal claims. As a shareholder, Tammi's liability is:
a. just like that of partners.
b. unlimited.
c. limited to a maximum of $50,000.
d. limited to her investment in the stock. - Answer d. limited to her investment in the stock.
The liability of shareholders is limited to the amount that they have invested in the
corporation's stock.
Tough TVs, a corporation, makes a profit in its first year of existence. The managers of the
corporation decide to reinvest the profits. The reinvested profits are called:
a. public earnings.
b. shareholder profits.
c. retained earnings.
d. dividends. - Answer c. retained earnings.
Retained earnings is the correct term. Retained earnings are the portion of a corporation's
profits that has not been paid out as dividends to shareholders.
Rena incorporates her business, Rena's Rhinestones, in her home state of Maryland. She wants
to expand and sell some of her jewelry in Virginia. In Virginia, her company will be considered:
a. a public corporation, so she will probably not have to obtain a license to do business there.
b. a foreign corporation, and she will probably have to obtain a certificate of authority to do
business there.
, d. an alien corporation, because her business has been chartered in another state. - Answer
b. a foreign corporation, and she will probably have to obtain a certificate of authority to do
business there.
Rena's Rhinestones is known as a foreign corporation in Virginia, because it was formed in one
state but is doing business in another. Rena will most likely have to obtain a certificate of
authority before conducting business in any state other than Maryland.
Micah and Jonah want to start a corporation but want to be taxed as a partnership. They should
form:
a. a public corporation.
b. an S corporation.
c. a benefit corporation.
d. a C corporation. - Answer b. an S corporation.
An S corporation is taxed like a partnership, so the corporate income passes through to the
shareholders, who pay personal income tax on it.
Acme Co. just completed the incorporation process and received its articles of incorporation
from the state. At the first organizational meeting of the new company, the officers' most
important task is to:
a. amend the articles of incorporation.
b. determine the details of the stock sale.
c. create a hiring policy.
d. adopt bylaws. - Answer d. adopt bylaws.
The bylaws of a corporation are the internal rules of management for the corporation. Their
adoption is the most important function of this meeting.
Keenan wants to incorporate his business. He buys business cards and labels with the name
"Keenan's Kwips" on them and begins selling gag gifts. Keenan follows the rules for
incorporation in his state, including a statement that he is the sole shareholder, and he is
granted a certificate of incorporation. The only problem is that Keenan has an error in his
Final Exam Questions and All Correct
Answers 2025-2026 Updated.
Tammi purchases stock in Vivaldi Corporation. Vivaldi Corporation later encounters legal issues
and faces significant legal claims. As a shareholder, Tammi's liability is:
a. just like that of partners.
b. unlimited.
c. limited to a maximum of $50,000.
d. limited to her investment in the stock. - Answer d. limited to her investment in the stock.
The liability of shareholders is limited to the amount that they have invested in the
corporation's stock.
Tough TVs, a corporation, makes a profit in its first year of existence. The managers of the
corporation decide to reinvest the profits. The reinvested profits are called:
a. public earnings.
b. shareholder profits.
c. retained earnings.
d. dividends. - Answer c. retained earnings.
Retained earnings is the correct term. Retained earnings are the portion of a corporation's
profits that has not been paid out as dividends to shareholders.
Rena incorporates her business, Rena's Rhinestones, in her home state of Maryland. She wants
to expand and sell some of her jewelry in Virginia. In Virginia, her company will be considered:
a. a public corporation, so she will probably not have to obtain a license to do business there.
b. a foreign corporation, and she will probably have to obtain a certificate of authority to do
business there.
, d. an alien corporation, because her business has been chartered in another state. - Answer
b. a foreign corporation, and she will probably have to obtain a certificate of authority to do
business there.
Rena's Rhinestones is known as a foreign corporation in Virginia, because it was formed in one
state but is doing business in another. Rena will most likely have to obtain a certificate of
authority before conducting business in any state other than Maryland.
Micah and Jonah want to start a corporation but want to be taxed as a partnership. They should
form:
a. a public corporation.
b. an S corporation.
c. a benefit corporation.
d. a C corporation. - Answer b. an S corporation.
An S corporation is taxed like a partnership, so the corporate income passes through to the
shareholders, who pay personal income tax on it.
Acme Co. just completed the incorporation process and received its articles of incorporation
from the state. At the first organizational meeting of the new company, the officers' most
important task is to:
a. amend the articles of incorporation.
b. determine the details of the stock sale.
c. create a hiring policy.
d. adopt bylaws. - Answer d. adopt bylaws.
The bylaws of a corporation are the internal rules of management for the corporation. Their
adoption is the most important function of this meeting.
Keenan wants to incorporate his business. He buys business cards and labels with the name
"Keenan's Kwips" on them and begins selling gag gifts. Keenan follows the rules for
incorporation in his state, including a statement that he is the sole shareholder, and he is
granted a certificate of incorporation. The only problem is that Keenan has an error in his
