Exam 14: Business Forms and Arrangements

Shareholders always have the right to a dividend if the corporation is profitable.

Briefly discuss how the law restricts the actions of a partner in relation to the partnership and its business activities.

A capital contribution clause in a partnership agreement would describe how profits are to be shared,how and when they are to be distributed,and rights of withdrawal.

A court has been asked to resolve a matter involving the disputed interests of partners regarding partnership property and their respective rights and duties in relation to the partnership.Which of the following would immediately provide the court with a basis for a decision?

Which of the following is most likely to be indicated by a description that includes,among other things,the option to purchase a partner's interest and the valuation of interests?

What is the term for an arrangement whereby a manufacturer has agreed to provide products and a dealer has agreed to carry those products or perform services for the manufacturer?

One of the advantages of being a sole proprietor is the ease by which the business can be sold or transferred to others.

Identify and briefly explain what feature of a corporation allows for the easy transfer of ownership,how ownership is transferred,and the source of restrictions,if any,on the transfer of ownership.

Investors in a corporation are paid a return on their capital investment if there is profit and if the directors declare a dividend.

All of Canada's common law provinces have a Partnership Act modelled on the British act of the same name.

The vehicle most commonly used as an investment device is a limited liability partnership,in which at least one partner has unlimited liability and the rest have limited liability.

Which of the following describes the relationship of a partner to outsiders of the firm?

The president of EcoAgents must affix the company's corporate seal to the bank's lending agreement he signed because this form of business entity lacks the legal capacity to borrow capital.

Which form of a business does not have the capacity to borrow capital in its own right?

Raven and Dita operate Read4Life,a reading tutor service.They have pooled their resources and are carrying on business together with the hope of turning a profit.In law,how is their business relationship characterized?

A key feature of a partnership is that each partner is fully responsible for all of the debts and obligations of the business.

Len,Jill,and Mark own a partnership called Splats.Len's capital contribution to the partnership was $25 000,Jill's was $12 500,and Mark's was $20 000.Jill is duly registered as a limited partner and has acted solely as a financier.There is no agreement on sharing profits or losses among the partners,and none of them has drawn any income from Splats.The partnership borrowed $40 000 from the bank,but Splats eventually became insolvent and was unable to repay the loan.The bank sued Len and recovered the full $30 000 from him.When Len's lawyer gave him advice,what amount would he likely indicate Len is entitled to legally recover from Jill?

A sole proprietor cannot hire employees.

Which of the following may result in a loss of limited liability in a corporation?

The law restricts a partner from making a personal profit from partnership property because that would be putting that partner's interests ahead of the other partners.