Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) The corporate bylaws are a standard set of rules established by the state of incorporation. These rules are identical for all corporations in the state, and their purpose is to ensure that the
• Firm's managers run the firm in accordance with state laws.
• B) The corporate charter is a standard document prescribed by the state of incorporation, and its purpose is to ensure that the firm's managers run the firm in accordance with state laws.
• Procedures for electing corporate directors are contained in bylaws, while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate
• Charter.
• C) Companies must establish a home office, or domicile, in a particular state, and that state must be the one in which most of
• Their business (sales, manufacturing, and so forth) is conducted.
• D) Attorney fees are generally involved when a company develops its charter and bylaws, but since these documents are voluntary, a new corporation can avoid these costs by deciding not to have either a
• Charter or bylaws.
• E) The corporate charter is concerned with things like what business the company will engage in, whereas the bylaws are concerned with things like procedures for electing the board of directors.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Common Share

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company’s profits through dividends.

Current Ratio

A financial ratio that evaluates a firm's capacity to cover its short-term liabilities using its existing assets.

Acid-Test Ratio

A financial metric that evaluates a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.