Several States' Constitutions Place Stricter Limits Than the MBCA on Permissible

question 13

Multiple Choice

Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.Which of the following considerations is permissible under the MBCA but not permissible by such state constitutions?

• A)A promoter's preincorporation services worth $25,000,which services were performed prior to incorporation.
• B)A gratuitous promise to contribute $35,000 in cash to the corporation.
• C)Bonds of another corporation,which bonds are worth $15,000.
• D)The president's actual performance of services for the corporation,which services are worth $50,000.

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Definitions:

First Processing Department

The initial stage or department in a manufacturing process where raw materials begin to be transformed into finished products.

Conversion Costs

Costs incurred to convert raw materials into finished goods, typically including direct labor and manufacturing overhead.

Equivalent Units

A concept in cost accounting used to approximate the amount of finished goods produced from partially completed goods.

First Processing Department

The initial stage or section in a manufacturing or processing facility where raw materials begin their transformation into finished products.