Deck 14: Managing a Business: Start-Up

Question 1

What is a 'fixture'?

A)Something that has been or is affixed to land in order to enhance its value in some way.
B)Any object permanently affixed to the land regardless of its impact on the value of the property.
C)Any fitting on the land, permanent on not.
D)An object affixed to land that has become part of the land.

Answer 1

D

Question 2

Jonah wants advice on starting a business in Queensland.He has just arrived in Australia after living in Canada and does not know where to go for help.Which of the following sources of information would you not recommend?

A)www.business.gov.au.
B)A legal firm specialising in business advice.
C)The Queensland Department of Tourism, Regional Development and Industry.
D)www.smallbiz.nsw.gov.au.

Answer 2

D

Question 3

When deciding whether an item is a fixture or a fitting, which of the following factors is the Court least likely to consider?

A)The intention of the person who attached the object to the land or building.
B)How easily the objects can be removed.
C)The cost of the item.
D)Whether substantial damage would be caused by the object's removal.

Answer 3

C

Question 4

Which of the following is not a feature of a life estate?

A)Ownership held for a lifetime.
B)The owner of the life estate can sell the property but cannot bequeath it in their will.
C)Ownership in the 'remainder' passes after a particular life has ended.
D)The owner of the life estate is entitled to rent and income from the property during their lifetime.

Question 5

What is a 'licence'?

A)Permission from a statutory authority to do something that would otherwise be illegal.
B)A type of verbal agreement.
C)An authority granted under the Corporations Act.
D)The authority pertaining to the conduct of a particular business that comes with registration of a business name.

Question 6

Which of the following statements is false?

A)A bailment exists where a person is in temporary possession of property belonging to another.
B)Personal property denotes all types of property other than 'real' property.
C)A chose in action is a form of tangible personal property.
D)Ownership usually means the same thing as 'title'.

Question 7

If an accountant negligently provides advice to a client and that client suffers economic loss as a result, what type of insurance will cover the damages that the accountant will be required to pay?

A)Public liability insurance
B)Negligent advice insurance
C)Professional indemnity insurance
D)Tort insurance

Question 8

In what circumstances will a person not be obliged to register their business name?

A)If they are proposing to carry on business in their own name
B)If they are a sole trader
C)If they are a company
D)If they are a trustee

Question 9

Details of who will take over a business when the present business owner retires or dies are set out in the:

A)succession plan.
B)insurance plan.
C)risk management plan.
D)marketing plan.

Question 10

In which of the following circumstances will an application to register a particular business name be rejected?

A)Where the name is similar to one that has already been registered.
B)Where the name is not in English.
C)Where the name is the name of a person or group of persons.
D)Where the name is deemed irrelevant to the type of business in question.

Question 11

Which of the following types of insurance is it advisable for a business owner to obtain when starting a new business on leased premises that will be visited by members of the public?

A)Medical insurance
B)Professional indemnity insurance
C)Pubic liability insurance
D)Tort Insurance

Question 12

Fiona wants to set up a beauty salon in the Sydney CBD.It is important that she takes the steps to set up the salon in appropriate order.Which of the following ought she, ideally, do last?

A)Make an application for a substantial bank loan secured by a mortgage on her home.
B)Find out the number of competing beauty salons in the CBD and whether there is room for her business in the market.
C)Seek financial, legal and business advice on important aspects of the business.
D)Find out the costs of renting shop space in the CBD and the other costs of the business.

Question 13

Ashley, a pharmacist, develops a formula that can revitalise hair growth.She uses the formula to create her own line of hair products.Which of the following should she do before going into the business of selling this product?

A)Reach agreement with potential investors to finance the manufacture of the formula.
B)Protect her IP in the formula before disclosing the formula to anyone.
C)Distribute free samples to the public to raise awareness of her new product and set up a website promoting the formula.
D)Publish the details of the formula in a scientific journal.

Question 14

Which of the following statements about a 'tenancy in common' is correct?

A)A tenancy in common allows the co-owners of land to own unequal shares in the land.
B)A tenancy in common is based on the right of survivorship.
C)A tenancy in common can only be formed between 3 or more co-owners of land.
D)A tenancy in common only exists if each co-owner of land acquires their interest at the same time.

Question 15

What is the 'classic' view about how far below the land is owned by a landowner?

A)500 meters.
B)50 metres.
C)As much as is reasonably necessary for the owner's use and enjoyment of the land.
D)To the centre of the earth.

Question 16

The owner of the Old Doghouse Theatre, Mr Cornpop, has signed a contract for the sale of the theatre to the Chaplins.Following the signing of the contract, Mr Cornpop attempts to remove from the theatre the wooden seats (easily packed away when the theatre is used for dance practice), the front doors (firmly attached to the door frames) and the projector (firmly attached to the floor), insisting that they were not included in the sale.The Chaplins try to stop him, arguing that they are all fixtures and therefore part of the theatre.What can Mr Cornpop legally take?

A)The seats only.
B)All of the items.
C)The doors and the seats.
D)The projector only.

Question 17

Tara is invited by Renee to invest in Renee's business.Tara wants to know in detail how Renee plans to deal with particular problems that may arise in the course of running the business.Tara will want to look at Renee's:

A)strategic plan.
B)marketing plan.
C)risk management plan.
D)insurance plan.

Question 18

Taking out the right type of insurance is important because it:

A)protects the business from potential risks.
B)is a valuable asset.
C)is required by law.
D)does not cost anything.

Question 19

Which of the following is not an advantage to a business person of buying business premises?

A)The capacity to claim depreciation costs as a tax deduction.
B)Security of tenure.
C)Avoiding potential restrictions on the use of the premises.
D)Ability to easily change premises.

Question 20

'Real property' includes:

A)land, buildings and fixtures.
B)any right or interest that can be owned by a person.
C)intellectual property.
D)all tangible property.

Question 21

Chastity and her partner Harley are joint tenants of their home at Concrete Breezes.When Chastity dies, Chastity's will provides that a one-tenth share of her half of the home is to go to each of the following members of her family; Salisha and Sloan, the two of her five natural children who still speak with her; Trace and Ted, her two step children; Jack and Strop her three half-brothers; Callum and Hamish, the children she is surrogate mother of; her former lover, Chopper; and her Fox terrier, Yelp.Harley is stunned that Chastity seems to have remembered everyone in her will but him.What share of the property will Harley ultimately be left with?

A)50%
B)100%
C)55%
D)None

Question 22

What is a 'domain name'?

A)The name of a trading market for a commodity
B)The name of a franchise of a large group or companies
C)The name given to an internet site address
D)The name given to an internet search engine address

Question 23

What are the legal consequences of signing a contract for the sale of real property?

A)The purchasers own an equitable interest in the property.
B)The purchaser has an option to sell the property.
C)The purchaser is the trustee for the vendor.
D)The purchaser has legal ownership of the property.

Question 24

What are the two main types of leases?

A)A fixed term lease and a periodic lease
B)Tenancy in common and a joint tenancy
C)Periodic tenancy and a freehold tenancy
D)A Torrens title lease and a registered lease

Question 25

Which of the following is not a usual characteristic of a lease?

A)Unity of possession
B)Exclusive possession
C)A prescribed form
D)Certainty of duration

Question 26

Johnny leases a house to Jane on the condition that he can also lease the same house to other tenants if he decides to do so.With which fundamental requirement of a lease is this arrangement inconsistent?

A)Certainty of duration.
B)Exclusive possession.
C)Certainty of rent.
D)Form and registration.

Question 27

Which of the following is not true of a caveat?

A)It can be used to protect both equitable and legal interests in land.
B)It is recorded on the register.
C)It is used to inform others about a registered interest.
D)It prevents further dealings with the property without the consent of the caveator or removal of the caveat.

Question 28

Which is true of an equitable, but not a legal, interest in land?

A)It is an interest in property that is recognised by equity.
B)It is an interest in property established by the common law.
C)It can be protected by a caveat.
D)It is recorded on the title.

Question 29

A 'cybersquatter' is:

A)a computer hacker who engages in web address and domain name harvesting.
B)a scammer who downloads malicious software onto personal computers via email services.
C)a scammer who monitors sites with high traffic for the purpose of stealing personal information by means of spyware.
D)someone who registers a domain name using the trademark of a well-known company and then tries to sell it to them.

Question 30

A licence never gives one the right in relation to a property to:

A)sole or exclusive possession.
B)occupation.
C)removal of objects.
D)do an action that would otherwise amount to trespass to land.

Question 31

A domain name will have to be surrendered when:

A)the person seeking to register it has a legitimate interest in the name but it has not been registered.
B)the name is being used in good faith, but it has not been registered.
C)the name is likely to be confused with a trademark to which a complainant has rights.
D)the name looks somewhat like a trademark to which the complainant has rights.

Question 32

Which of the following is not a type of special condition that is commonly included in a standard contract?

A)Subject to registration of a plan of subdivision
B)Subject to a party's capacity to obtain finance
C)Subject to rezoning
D)Subject to a party's decision to continue

Question 33

How are retail trading hours restricted in Queensland?

A)Monday to Friday and Saturday trading is restricted and Sunday trading is prohibited outside major towns.
B)Monday to Sunday trading hours are unrestricted.
C)Monday to Saturday trading hours are unrestricted but Sunday trading is prohibited except with a licence.
D)There are no trading hours regulations in Queensland.

Question 34

Which of the following is not a type of business structure?

A)Sole trader
B)Limited liability partnership
C)Company
D)Business

Question 35

Retail shop lessees under the relevant legislation may have special rules and entitlements.Which of the following is not one such special entitlement?

A)Rights relating to disclosure by the lessor
B)Rights relating to verbal leases
C)Rights relating to restrictions on the manner in which disputes can be resolved
D)Rights relating to renewal and extension of the lease

Question 36

Which of the following terms would one not generally find in a lease document?

A)The date of commencement and duration of the lease
B)Provision for payment of insurance, outgoings and repair costs
C)A ratchet clause
D)Provision for a right of survivorship

Question 37

Which of the following is not true of strata title?

A)It refers to the vertical subdivision of airspace above land.
B)It applies to high rise buildings.
C)It provides for common property in the way of stairwells, elevators, reception areas and gardens.
D)It applies to all residential complexes.

Question 38

Which is the following is not a usual step in the process of buying real property?

A)The purchaser arranges finance or a building, pest or other inspection
B)The purchaser makes an offer
C)The purchaser signs a contract
D)The purchaser pays a 25% deposit

Question 39

The right of survivorship is a right that is associated with:

A)a life estate.
B)a joint tenancy.
C)a tenancy in common.
D)an estate in fee simple.

Question 40

Which of the following is not a feature of the Torrens system of title registration?

A)Unregistered interests in land may be protected by a caveat.
B)Equitable interests in land may be protected by a caveat.
C)A prospective land buyer only needs to be concerned with the interests that are recorded on the Register.
D)A seller must show a good 'root of title', being able to trace ownership of the land back through history.

Question 41

Which of the following is not a characteristic of a lease?

A)Exclusive possession
B)Certainty of duration
C)Separation of ownership and possession
D)Payment of rent by lessor

Question 42

A commercial lease document is least likely to include a term that:

A)sets out the names of the parties.
B)describes the leased premises.
C)sets the rent.
D)transfers ownership to the lessee.

Question 43

Which of the following is not an advantage of leasing one's business premises?

A)The flexibility of moving to different premises at the end of the lease term
B)Lease payments may be a tax deductible expense
C)Rent money contributes to payment for an asset
D)Initial costs are much lower than when buying premises

Question 44

Zee Holden is planning on setting up a printing business.Zee must register her business name unless the business name is:

A)Zee Holden.
B)Zee's Printing.
C)Holden Printing.
D)ZH Printing.

Question 45

An unregistered interest in Torrens system land can be protected by lodging a:

A)mortgage.
B)caveat.
C)charge.
D)easement.

Question 46

Which of the following leases lacks certainty of duration and is therefore invalid?

A)A lease for three years from 1 January 2010
B)A lease for one year signed by the parties on 1 April 2010 but stated to commence from 1 March 2010
C)A lease 'until the end of Semester 2, 2010'
D)A lease 'until the tenant dies'

Question 47

Sandra has set up a DVD-rental company, EzyMovie Pty Ltd.Which of the following can EzyMovie Pty Ltd not do?

A)Own the business premises
B)Sue a customer
C)Enter into a contract with Sandra
D)Have more than 50 non-employee shareholders

Question 48

Which of the following promises by a lessee (tenant) is not implied by common law or statute?

A)A promise to give up possession of the premises at the end of the lease
B)A promise to quietly enjoy the premises
C)A promise to use the premises in a 'tenant-like' manner
D)A promise to pay rent

Question 49

Christopher has set up an accounting business offering professional accounting advice.Which of the following type of insurance is he most likely to need?

A)Public liability insurance
B)Product liability insurance
C)Life insurance
D)Professional indemnity insurance

Question 50

Shane has installed two air conditioning units in the house that he owns.The units are built into the wall.The air-conditioning units are:

A)tenant's fixtures.
B)fittings.
C)attachments.
D)fixtures.

Question 51

Both incorporated associations and unincorporated associations:

A)are separate legal entities.
B)have limited liability.
C)must be registered.
D)are not for profit associations.

Question 52

X and Y buy a house together, each contributing half of the cost.The house is registered in the name of X, that is, X is the legal owner of the house.X will be a trustee and Y will be a beneficiary under:

A)an express trust.
B)a resulting trust.
C)a discretionary trust.
D)a unit trust.

Question 53

Xania and Kim are drafting a written partnership agreement.Which of the following is least likely to be included in the partnership agreement?

A)A term stating that each partner will make an initial financial contribution of $10 000.
B)A term stating that the partnership will be an ongoing one.
C)A term stating that profits and losses are to be shared equally.
D)A term stating that decision making will be by majority.

Question 54

Jimmy wishes to form a partnership with his friend Timmy.They intend to run a used computer shop together.Which of the following elements must be present in order to establish the partnership?

A)They must both be good at repairing computers.
B)They must both intend to make a profit.
C)They must share the profits equally between them.
D)They must register the partnership with ASIC.

Question 55

Tommy plans to set up a convenience store in his local town.Which of the following is not a plan that he should prepare?

A)A marketing plan
B)A business plan
C)An export plan
D)A risk management plan

Question 56

Nate wants to start a business involving the manufacture of fishing boats.However, he is worried that if one of the boats that he sells ends up sinking, he might become bankrupted if the buyer sues him.Which business structure should Nate adopt?

A)Partnership
B)Company
C)Trust
D)Sole trader

Question 57

Most commercial leases contain:

A)an option to renew.
B)an option to purchase.
C)an option to sell.
D)an option to merge.

Question 58

Anne and Ginny are thinking of buying and running a grocery store business together.They do not wish to incorporate, and would prefer to remain personally liable for the business.Which of the following business structures best suits their needs?

A)Partnership
B)Sole trader
C)Company
D)Trust

Question 59

Farmer Joe has just signed a contract to buy a farm.Which of the following is a fixture and therefore automatically included in the purchase?

A)The cows in the field
B)The well in the backyard
C)The tractor in the shed
D)The bales of hay in the shed

Question 60

Michelle is a business graduate with a gift for baking.She is thinking of opening a cake shop called 'Sweetest Secrets'.Which of the following is not an action that she should take before opening her shop?

A)Register the 'Sweetest Secrets' trade mark.
B)Select a business structure.
C)Take out public liability insurance.
D)Appoint a receiver.

Question 61

The choice of business structure is an important decision for many reasons.Which of the following is not an important practical consideration to be taken into account when deciding what structure a proposed business ought to have?

A)The ease and cost of setting up the structure.
B)The way tax is paid and finance is secured.
C)The ongoing regulatory obligations.
D)The name of the business.

Question 62

Whether a person setting up a new business operates as a sole trader, forms a partnership or sets up a company is a question about the:

A)architecture of the business.
B)legal structure of the business.
C)social structure of the business.
D)profitability of the business.

Question 63

Ashley wishes to register a domain name for his business.Which top level domain is he not entitled to use?

A).biz
B).com
C).info
D).edu

Question 64

Which of the following is a disadvantage of owning business premises?

A)The business owner does not benefit from any increase in the value of the premises.
B)The landlord may impose restrictions upon the use of the premises.
C)The business may be more difficult to sell.
D)Depreciation costs cannot be claimed as a tax deduction.

Question 65

A lessor of a retail shop is unlikely to be permitted to:

A)charge rental based upon the lessee's turnover.
B)grant a five-year lease.
C)charge the lessee key money.
D)increase the rent during the term of the lease.