AICPA CPA Business Environment and Concepts BEC Dumps in PDF

Free AICPA BEC Real Questions (page: 9)

Jeb, a member in J & S LLC, sold his interest in the LLC to Chris without obtaining the other members' consent. Absent an agreement to the contrary, Chris:

I). May participate in the management of J & S.
II). May receive Jeb's share of J & S's profits.
III). Is not entitled to anything since Jeb did not obtain the other members' consent.

  1. I only.
  2. I and II only.
  3. II only.
  4. III only.

Answer(s): C

Explanation:

Choice "c" is correct. Absent an agreement to the contrary, if a member in the LLC sells his interest in an LLC without obtaining the other members' consent, the assignee is only entitled to receive the assignor's share of profits.
Choices "a", "b", and "d" are incorrect, because, absent an agreement to the contrary, although a member of an LLC is allowed to assign his interest in profits and losses, an assignee of a membership interest may not participate in the management of the LLC.



Which of the following parties generally has the most management rights?

  1. Minority shareholder in a corporation listed on a national stock exchange.
  2. Limited partner in a general partnership.
  3. Member of a limited liability company.
  4. Limited partner in a limited partnership.

Answer(s): C

Explanation:

Choice "c" is correct. Unless the articles or operating agreement provides otherwise, all members of the LLC have a right to participate in management. A member of a limited liability company has the most management rights of any of the parties listed. A minority shareholder in a corporation has no management rights (and neither does a majority shareholder). A limited partner has no day-to-day management rights but may have some rights in extraordinary circumstances. It is unclear what a limited partner in a general partnership would even be; the existence of a limited partner would make a partnership a limited partnership and not a general partnership. Choice "a" is incorrect. Stockholders have very limited rights to run the corporation. They generally only have the right to elect directors and to vote on fundamental changes in the corporation. Such fundamental changes would include dissolutions, amendments to the articles, mergers, consolidations, compulsory share exchanges, and sale of substantially all of the corporation's assets. Choice "b" is incorrect. There are no limited partners in a general partnership. There are only general partners. Since there are no limited partners, there are no management rights for limited partners. Choice "d" is incorrect. Limited partners in a limited partnership have very limited rights to participate in the management of the business. In fact, if they do participate in management, they face potential liability to those who thought they were a general partner (i.e., if a limited partner becomes involved in day-to-day management is some way (participating in control), she may be treated as a general partner and lose her limited liability).
Corporation



Case Corp. is incorporated in State

  1. Under the Revised Model Business Corporation Act, which of the following activities engaged in by Case requires that Case obtain a certificate of authority to do business in State B?
  2. Maintaining bank accounts in State
  3. Collecting corporate debts in State B.
  4. Hiring employees who are residents of state B.
  5. Maintaining an office in State B to conduct intrastate business.

Answer(s): D

Explanation:

Choice "d" is correct. A domestic corporation is one created under the laws of a given state. A foreign corporation is a corporation created under the laws of another state. A foreign corporation must obtain a certificate of authority from each state in which it does intrastate business. Choices "a", "b", and "c" are incorrect because maintaining a bank account, collecting debts, and hiring employees who live within a state are not considered to be "doing business" within the state.



Which of the following statements is(are) correct regarding the methods a target corporation may use to ward off a takeover attempt?

I). The target corporation may make an offer ("self-tender") to acquire stock from its own shareholders.
II). The target corporation may seek an injunction against the acquiring corporation on the grounds that the attempted takeover violates federal antitrust law.

  1. I only.
  2. II only.
  3. Both I and II.
  4. Neither I nor II.

Answer(s): C

Explanation:

Choice "c" is correct.
Rule: A tender offer is a general invitation by a bidder to the shareholders of a target company to tender their shares to the bidder at a specified price during a specified time. A target of a takeover may ward off a tender offer by offering to repurchase shares from its shareholders. If a takeover will violate federal antitrust law, a court will enjoin the takeover. Choices "a", "b", and "d" are incorrect, per the above rule.



Acorn Corp. wants to acquire the entire business of Trend Corp.
Which of the following methods of business combination will best satisfy Acorn's objectives without requiring the approval of the shareholders of either corporation?

  1. A merger of Trend into Acorn, whereby Trend shareholders receive cash or Acorn shares.
  2. A sale of all the assets of Trend, outside the regular course of business, to Acorn, for cash.
  3. An acquisition of all the shares of Trend through a compulsory share exchange for Acorn shares.
  4. A cash tender offer, whereby Acorn acquires at least 90% of Trend's shares, followed by a short- form merger of Trend into Acorn.

Answer(s): D

Explanation:

Choice "d" is correct. A parent corporation owning 90% or more of a subsidiary may merge the subsidiary (short form merger) into the parent without the approval of the shareholders of either corporation or the approval of the subsidiary's board.
Choices "a", "b", and "c" all require at least one of the corporations to follow the general procedure for fundamental corporate changes (i.e., board resolution notice, approval by majority shares, and filing).



Under the Revised Model Business Corporation Act, which of the following statements regarding a corporation's bylaws is(are) correct?

I). A corporation's initial bylaws shall be adopted by either the incorporators or the board of directors.
II). A corporation's bylaws are contained in the articles of incorporation.

  1. I only.
  2. II only.
  3. Both I and II.
  4. Neither I nor II.

Answer(s): A

Explanation:

Choice "a" is correct. Under the Revised Model Business Corporation act, a corporation's initial bylaws may be adopted by either the incorporators or the board of directors. Choices "b" and "c" are incorrect, because the corporation's bylaws are a separate document not included in the corporation's articles of incorporation. Choice "d" is incorrect, because under the Revised Model Business Corporation Act, a corporation's initial bylaws may be adopted by either the incorporators or the board of directors.



Under the Revised Model Business Corporation Act, which of the following must be contained in a corporation's articles of incorporation?

  1. Quorum voting requirements.
  2. Names of stockholders.
  3. Provisions for issuance of par and nonpar shares.
  4. The number of shares the corporation is authorized to issue.

Answer(s): D

Explanation:

Choice "d" is correct. The articles must set out the corporation's authorized shares. Choice "a" is incorrect. Quorum requirements, if stated at all, usually are in the bylaws; they need not be included in the articles of incorporation.
Choice "b" is incorrect. The articles need not include the names of stockholders.

Choice "c" is incorrect. The RMBCA has eliminated the concept of par value and so does not have a requirement that par value be established in the articles.



Under the Revised Model Business Corporation Act, a merger of two public corporations usually requires all of the following, except:

  1. A formal plan of merger.
  2. An affirmative vote by the holders of a majority of each corporation's voting shares.
  3. Receipt of voting stock by all stockholders of the original corporations.
  4. Approval by the board of directors of each corporation.

Answer(s): C

Explanation:

Choice "c" is correct. A merger can be effected by giving some parties cash or property; not everyone need receive voting shares.
Choice "a" is incorrect. The merger must be pursuant to a formal plan. Choice "b" is incorrect. The majority of each corporation generally must approve a merger. Choice "d" is incorrect. A plan of merger must be approved by the boards of the merging corporations.



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