Free Practice Questions for ACP Corporate

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Key Facts: ACP Corporate Exam

85%

Passing Score

NALA course requirement

~20 hours

Course Length

NALA (web-based course)

3 attempts

Final Assessment Retakes

NALA (per course purchase)

$250 / $300

Member / Non-member Fee

NALA

CP credential

Prerequisite

NALA eligibility

100

Free Practice Questions

OpenExamPrep

The NALA ACP Business Organizations: Incorporated Entities credential is an advanced paralegal specialty requiring a current NALA Certified Paralegal (CP) credential in good standing. It is delivered as a web-based, curriculum-based course of approximately 20 hours that ends in an online final assessment requiring 85% to pass, with up to three attempts before repurchase. The fee is $250 for NALA members and $300 for non-members. The substantive law tested spans entity selection and formation (C-corp, S-corp, LLC), corporate governance and fiduciary duties, shareholder and member rights, formation documents and state filings, mergers, acquisitions and dissolution, and securities and recordkeeping basics, grounded in the DGCL, the Internal Revenue Code, and federal securities law.

Sample ACP Corporate Practice Questions

Try these sample questions to review concepts for the ACP Corporate exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A client wants a business entity that provides limited liability for all owners and avoids the federal double taxation that applies to a standard for-profit corporation. The owners want maximum flexibility in allocating profits and a relatively simple management structure. Which entity best fits these goals by default?

A.A limited liability company (LLC)

B.A C corporation

C.A general partnership

D.A sole proprietorship

Explanation: An LLC gives every member limited liability while being taxed by default as a pass-through entity (disregarded entity or partnership), avoiding the entity-level corporate income tax. It also allows flexible profit allocations and either member- or manager-management.

2A corporation that has not made any special tax election is, by default, taxed under which federal regime?

A.As an S corporation under Subchapter S

B.As a C corporation under Subchapter C

C.As a partnership under Subchapter K

D.As a disregarded entity

Explanation: A corporation that makes no election is taxed as a C corporation under Subchapter C of the Internal Revenue Code, meaning it pays entity-level income tax and shareholders are taxed again on dividends (double taxation).

3To elect S corporation status with the IRS, an eligible corporation must file which form?

A.Form 1120

B.Form 8832

C.Form 2553

D.Form SS-4

Explanation: Form 2553, Election by a Small Business Corporation, is filed to elect S corporation treatment under IRC section 1362(a). It must generally be filed by the 15th day of the third month of the tax year for which the election is to take effect.

4Which of the following would disqualify a corporation from electing or maintaining S corporation status?

A.Having 75 shareholders who are all U.S. citizens

B.Having a single individual U.S.-resident shareholder

C.Issuing voting and non-voting shares of the same class of common stock

D.Issuing a second class of stock that has different liquidation and distribution rights

Explanation: An S corporation may have only one class of stock. Creating a class with different rights to distributions or liquidation proceeds violates the single-class-of-stock rule under IRC section 1361(b)(1)(D) and terminates eligibility.

5A startup expects to raise multiple rounds of venture capital from institutional investors and to grant employee stock options, with the goal of an eventual IPO. Which entity form do sophisticated investors and underwriters most commonly require?

A.A Delaware C corporation

B.A member-managed LLC

C.An S corporation

D.A limited partnership

Explanation: A Delaware C corporation is the standard choice for venture-backed startups because it can issue preferred stock, supports stock-option plans, accommodates unlimited and institutional shareholders, and offers a well-developed body of Delaware corporate case law that investors favor.

6In a single-member LLC that has made no entity classification election, how is the entity treated for federal income tax purposes by default?

A.As a C corporation

B.As a disregarded entity

C.As an S corporation

D.As a partnership

Explanation: Under the check-the-box regulations, a single-member LLC that makes no election is a disregarded entity: its income and expenses are reported directly on the owner's return (for an individual, on Schedule C), as if the LLC did not exist as a separate taxpayer.

7What is the principal liability advantage that a corporation or LLC provides to its owners that a general partnership does not?

A.The entity pays no income tax at any level

B.Owners may never be sued individually under any circumstances

C.Owners are shielded from personal liability for the entity's debts beyond their investment

D.Creditors are barred from reaching entity assets

Explanation: The core benefit of a corporation or LLC is limited liability: shareholders and members generally risk only their capital contribution and are not personally liable for the entity's debts and obligations, unlike general partners who face unlimited personal liability.

8A professional services firm of licensed architects wants limited liability but must comply with state rules governing licensed professionals practicing together. Which entity is specifically designed for this situation?

A.A nonprofit corporation

B.A general partnership

C.A benefit corporation

D.A professional corporation (PC) or professional LLC (PLLC)

Explanation: Licensed professionals typically form a professional corporation (PC) or professional limited liability company (PLLC). These entities provide limited liability for ordinary business debts while complying with state licensing statutes; they generally do not shield an individual professional from liability for that person's own malpractice.

9Under Delaware law, a corporation legally comes into existence at what point?

A.When the certificate of incorporation is filed with and accepted by the Delaware Secretary of State

B.When the incorporators sign the bylaws

C.When the board holds its first organizational meeting

D.When the corporation issues its first shares of stock

Explanation: Under DGCL section 106, a corporation's existence begins upon the filing of the certificate of incorporation with the Delaware Secretary of State. Bylaws, organizational meetings, and stock issuance occur after the entity already exists.

10A general partnership wants to give its limited partners a liability shield while keeping pass-through taxation, without converting to a corporation. The owners are comparing a limited partnership (LP) and a limited liability partnership (LLP). Which statement correctly distinguishes them in most states?

A.In an LP, all partners have limited liability; in an LLP, none do

B.In an LP, the general partner has unlimited liability while limited partners are shielded; in an LLP, all partners generally have a liability shield

C.An LP is taxed as a corporation while an LLP is always tax-exempt

D.Both LPs and LLPs require at least one shareholder and a board of directors

Explanation: A limited partnership requires at least one general partner with unlimited liability who manages the business; limited partners are shielded so long as they do not participate in control. An LLP, by contrast, provides a liability shield to all partners, which is why it is favored by law and accounting firms.

About the ACP Corporate Exam

The NALA Advanced Certified Paralegal (ACP) - Business Organizations: Incorporated Entities credential is an advanced specialty for paralegals who already hold the NALA Certified Paralegal (CP) credential. Candidates complete a web-based course of roughly 20 hours covering the substantive law of corporations and LLCs and conclude with an online final assessment. The credential demonstrates competence in entity formation, corporate governance, shareholder and member rights, mergers and dissolution, and securities fundamentals. A passing score of 85% is required, with up to three attempts per course purchase.

Exam sponsor: National Association of Legal Assistants (NALA). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

Question count not published by the exam provider

Time Limit

Self-paced course (~20 hours) + timed online final assessment

Passing Score

85%

Exam / Certification Fees

$250 (member) / $300 (non-member)

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Entity Selection & Formation

C-corp, S-corp, and LLC selection; limited liability; pass-through vs. double taxation; S election on Form 2553; one-class-of-stock and shareholder-eligibility rules; check-the-box classification; PC/PLLC and benefit corporations

18%

Corporate Governance

Board and officer roles, bylaws, quorum and voting, action by written consent, duty of care and duty of loyalty, business judgment rule, corporate opportunity doctrine, indemnification (DGCL 145), exculpation (102(b)(7)), and piercing the veil

16%

Shareholder & Member Rights

Voting and DGCL 220 inspection rights, proxies, cumulative voting, preemptive rights, derivative actions and the demand requirement, buy-sell agreements, rights of first refusal, preferred stock, dividends, and oppression remedies

16%

Formation Documents & State Filings

Certificate/articles of incorporation, articles of organization, operating agreements, registered agents, organizational meetings, foreign qualification, charter amendments, annual reports and franchise tax, and promoter liability

15%

Mergers, Acquisitions & Dissolution

Statutory mergers (DGCL 251), short-form mergers (253), asset vs. stock purchases, appraisal/dissenters' rights (262), tender offers, due diligence, HSR, voluntary and judicial dissolution, winding up, and liquidation priority

15%

Securities & Recordkeeping Basics

Securities Act of 1933 registration and exemptions, the Howey test, Regulation D Rule 506, accredited investors, Rule 10b-5 and insider trading, blue-sky laws, stock ledgers, minute books, par value, and Corporate Transparency Act reporting

Preparing for the ACP Corporate Exam

What You Need to Know

Passing score: 85%
Assessment: Question count not published by the exam provider
Time limit: Self-paced course (~20 hours) + timed online final assessment
Exam / certification fees: $250 (member) / $300 (non-member) Official sources

Using Our Practice Resources

Work through all 100 available questions
Review every answer and explanation
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ACP Corporate: Suggested Study Strategy

1Know the practical differences among C-corp, S-corp, and LLC, including the S-election limits: 100 shareholders, one class of stock, and only eligible U.S. shareholders

2Distinguish the formation documents: certificate/articles of incorporation create a corporation, while articles of organization create an LLC and the operating agreement governs it internally

3Master the two core fiduciary duties (care and loyalty) and how the business judgment rule protects informed, good-faith decisions but not self-dealing

4Understand the factors that lead courts to pierce the corporate or LLC veil: commingling funds, ignoring formalities, and undercapitalization

5Learn shareholder remedies: DGCL 220 inspection rights, derivative actions with the pre-suit demand requirement, preemptive rights, and oppression buyouts

6Study the M&A toolkit: statutory mergers, asset vs. stock purchases, appraisal/dissenters' rights, due diligence, and HSR premerger notification

7Review securities fundamentals: the 1933 Act registration default, Regulation D Rule 506 private placements, accredited investors, and Rule 10b-5 insider-trading prohibitions

Frequently Asked Questions

What is the NALA ACP Business Organizations: Incorporated Entities credential?

It is an Advanced Certified Paralegal specialty offered by the National Association of Legal Assistants. Paralegals who already hold the NALA Certified Paralegal (CP) credential complete a web-based course on corporate and LLC law and pass an online final assessment to earn the ACP designation in this area.

What are the eligibility requirements?

Candidates must hold the NALA Certified Paralegal (CP) credential in good standing. The ACP is an advanced specialty that builds on the CP, so the CP exam must be passed first before enrolling in an ACP specialty course.

How many questions are on the assessment?

NALA does not publish a fixed question count for the ACP final assessment. The course is curriculum-based and concludes with an online final assessment that must be passed at 85% to earn the credential.

How much does it cost?

The ACP Business Organizations course, which includes the final assessment, is $250 for NALA members and $300 for non-members. The course fee covers the instructional materials and the assessment.

What happens if I do not pass?

Candidates have up to three attempts at the final assessment per course purchase. If all three attempts are unsuccessful, the candidate must repurchase the course and start over.

How should I prepare?

Work through the ~20-hour NALA course and supplement it with focused study of entity selection and formation, corporate governance and fiduciary duties, shareholder and member rights, formation documents and state filings, M&A and dissolution, and securities basics. Completing practice questions on each topic reinforces the substantive law.

Free Practice Questions for ACP Corporate

NALA ACP — Business Organizations (Incorporated Entities)

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