Question 1
Business Law and Ethics QUIZ 2. In contrast to ________ and ________, the obligations of corporations are separate and distinct from the personal obligations of their principals.
- S corporations; C corporations
- partnerships; S corporations
- sole proprietorships; partnerships
- sole proprietorships; S corporations
Question 2
When a privately held corporation wishes to fund capitalization through the sale of ownership interest to the general public and commercial investors, the principals pursue a(n) ________ and then continue their corporate existence as a publicly held corporation.
- OPI
- POI
- ROI
- IPO
Question 3
Which of the following is true regarding professional corporations? (Check all that apply.)
- They are only open to members in good standing of a particular profession.
- Ownership is restricted to a particular profession licensed in that field.
- **Law firms that are organized as professional corporations may
Question 4
Which of the following is false regarding choosing Delaware as the state of incorporation?
- Delaware’s tax structure is favorable to out-of-state corporations that incorporate in Delaware.
- Some corporations choose Delaware as the state of incorporation because of that state’s permissive rules.
- Delaware provides protections to officers and directors through the business judgment rule.
- For the most part, publicly held corporations choose to incorporate in Delaware because the Delaware statutes give their officers and directors wide latitude in decision making that does not require shareholder consent.
Question 5
For multiperson ventures, the tax-related needs of the individuals rarely differ. Business Law and Ethics QUIZ 2
- True
- False
Question 6
Under the Sarbanes-Oxley Act, _________ and _________ of public companies must certify their financial statements.
- Internal auditors; external auditors
- Chairmen of the board; external auditors
- CEOs; CFOs
- CEOs; external auditors
Question 7
True or False: Under Section 1103 of the Sarbanes-Oxley Act, a formal allegation of wrongdoing is a prerequisite for the SEC to petition to temporarily freeze an extraordinary payment to an officer, director, or other employee.
- True
- False
Question 8
Which of the following is responsible for overseeing the financial reporting process and the audit of a company’s financial statements?
- Internal Audit Department
- External Auditors
- Audit Committee
- Board of Directors
Question 9
True or False: The Sarbanes-Oxley Act was enacted in response to a series of high-profile corporate accounting scandals in the early 2000s, such as Enron and WorldCom.
- True
- False
Question 10
The Dodd-Frank Act abolishes the compensation clawback provision of the Sarbanes-Oxley Act.
- True
- False
Question 11
Regarding the employee-CEO pay ratio disclosure requirement imposed by the SEC and the Dodd-Frank Act, a company is permitted to use its total employee population or a statistical sampling of that population and/or other reasonable methods.
- True
- False
Question 12
The federal Freedom of Information Act no longer applies to the SEC.
- True
- False
Question 13
Under the Dodd-Frank Act, a company must disclose in its annual proxy statement why it has either a) the same person or b) different persons serving as the CEO and the chairman of the board of directors.
- True
- False
Question 14
The Dodd-Frank Act requires transparency in disclosing whether a company uses a(n) ______ structure (i.e., two different persons holding CEO and board chair positions) or a(n) ______ structure (i.e., the same person for the CEO and chair positions).
- split; combined
- combined; split
- unitary; binary
- binary; unitary
Question 15
Identify and briefly describe the two primary provisions of the Dodd-Frank Act related to whistleblowers.
- Monetary Awards: Whistleblowers who provide original information leading to successful enforcement actions exceeding $1 million can receive 10% to 30% of the sanctions collected.
- Anti-Retaliation Protections: Employers are prohibited from retaliating against whistleblowers; remedies for violations include reinstatement and double back pay.
- Monetary Awards: Whistleblowers who provide original information leading to successful enforcement actions exceeding $1 million can receive 10% to 30% of the sanctions collected. 2
- Anti-Retaliation Protections: Employers are prohibited from retaliating against
Question 16
If an employee is terminated for whistleblowing, the employee is entitled to double back pay under the Dodd-Frank Act anti-retaliation provision.
- back
- triple back
- one-half back
- double back
Question 17
The Dodd-Frank Act expanded the SEC’s authority to bring enforcement actions against those who provide substantial assistance to another person in violation of the securities laws.
- revoked
- expanded
- limited
- eliminated. Business Law and Ethics QUIZ 2
Question 18
According to the _________ theory of corporate social responsibility, the only social responsibility of a business is to maximize profits for its owners.
- shareholder
- stakeholder
- sustainability
- ethical
