Which of the following corporate actions is subject to shareholder approval?
Answer(s): D
Choice "d" is correct. Shareholders have the right to elect and remove directors through the voting process. Choice "a" is incorrect. Officers are selected by the directors rather than by the shareholders.Choice "b" is incorrect. Because officers are selected by the directors, generally they may be removed only by the directors.Choice "c" is incorrect. Dividends generally can be declared only by the directors; shareholders usually do not have any right to declare or vote on a distribution.
Which of the following is a requirement for a small business corporation to elect S corporation status?
Answer(s): A
Choice "a" is correct. A corporation may elect to be taxed like a partnership under Subchapter S only if it has only one class of stock.Choice "b" is incorrect. A corporation can elect S corporation status only if its shareholders are individuals, estates, or certain types of trusts.Choice "c" is incorrect. Foreign shareholders generally are prohibited in an S corporation.Choice "d" is incorrect. An S corporation can have up to 100 shareholders, but it may have fewer.
The president of a company has signed a $10 million contract with a construction company to build a new corporate office. Which of the following corporate documents sets forth the scope of authority under which this transaction is governed?
Answer(s): C
Choice "c" is correct. The bylaws usually contain the rules for running the corporation.Choices "a" and "b" are incorrect. These are possible choices, but not as good an answer as "c". A corporation's articles of incorporation (called a charter in a few states) must set out certain information relevant to formation of the corporation, but it may include any other information that it is not illegal.However, usually details about intracorporate power are set out in bylaws rather than in the articles or charter. Choice "d" is incorrect. A proxy statement is a request to shareholders to allow their shares to be voted by a specified person in a specified way. It has nothing to do with a corporate president's authority.
A limited liability company taxed under subchapter K of the Internal Revenue Code (the partnership subchapter):
Choice "c" is correct. A limited liability company must have written articles of organization, which must be filed with the state.Choice "a" is incorrect. An LLC taxed under subchapter K of the Internal Revenue Code (the partnership subchapter) does not pay federal income tax; the members are taxed on their share of the LLC's income. Choice "b" is incorrect. Unlike a general partnership, but like a corporation and a limited partnership, an LLC is considered a legal entity separate and apart from its owners.Choice "d" is incorrect. An LLC does not have to provide for apportionment of liability for LLC debts; the members of an LLC have limited liability.
Post your Comments and Discuss AICPA CPA-Business exam with other Community members:
Venkatesh commented on September 08, 2023 I don't see Internal Control/Information technology related questions UNITED STATES upvote
Jay jain commented on May 25, 2023 This is nice platform Anonymous upvote
Our website is free, but we have to fight against bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CPA-Business content, but please register or login to continue.