Question 1

A business with no partners and no board of directors to report to is typically considered to be independent and positioned to act quickly when required.Which of the following is also typical of this form of business?

Accepted Answer

A)  its limited failure expectancy 
B)  its limited life expectancy 
C)  the diversity of profit-sharing plans 
D)  the complexity involved in its formation

Question 2

Emily,Harry,and Ron are partners in a business partnership called Trinkets.Emily contributed $15 000 to the business,Harry $10 000,and Ron $5000.The partners agreed among themselves that they will share partnership profits and losses in proportion to their contributions.In addition,the partnership borrowed $30 000 from the bank.The business didn't work out,and Trinkets is unable to repay the loan.The bank sued Emily personally.She repaid the full $30 000 and then sued Harry and Ron.What amounts may Emily be legally entitled to recover from her partners?

Accepted Answer

A)  $7500 from Harry and $7500 from Ron 
B)  $10 000 from Harry and $5000 from Ron 
C)  $15 000 from either Harry or Ron 
D)  $30 000 from either Harry or Ron

Question 3

Which of the following would most strongly support Martina's agreement to an allotment of a 25 percent interest in her partnership with Lorenzo and Marcella?

Accepted Answer

A)  It accurately reflects the partners' proportionment of her contributions. 
B)  It accurately reflects the value of their varied contributions. 
C)  It doesn't affect their ability to distribute shared profits equally. 
D)  It doesn't affect their ability to freely define their proportionate profit share.

Question 4

Briefly discuss the concept of joint liability and explain how joint liability impacts the liability exposure of partners in a partnership.

Accepted Answer

The answer of Briefly discuss the concept of joint liability...

Question 5

What is a positive feature of carrying on business as a limited partnership?

Accepted Answer

A)  All partners are completely shielded from negligent or wrongful acts of partners. 
B)  They can be used as an investment device. 
C)  They can be created informally. 
D)  All partners have the same rights.

Question 6

Which statement best describes the profit-sharing feature of corporations?

Accepted Answer

A)  Shareholders are paid a pre-determined rate of return. 
B)  Shareholders are automatically entitled to a dividend if the business is profitable. 
C)  The decision of whether to declare dividends is controlled by the shareholders. 
D)  Shareholders are only entitled to dividends if they are declared by the directors.

Question 7

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?

Accepted Answer

A)  a strategic alliance 
B)  a sales agency 
C)  a franchise 
D)  a distributorship

Question 8

In what manner are a sole proprietorship and a partnership similar?

Accepted Answer

A)  There is no legislated regulation affecting either. 
B)  Both require special steps to create. 
C)  Neither is a legal entity with capacity to contract. 
D)  Both require regulation of their profit motives.

Question 9

Shareholders may hire officers to assist in running the corporation.

Accepted Answer

A) True 
 B)False

Question 10

Rozzi,Shawn,and Rafael have entered into a written limited partnership agreement.Which of the following would be the most likely action needed to ensure the legal recognition of the limited partnerships' status?

Accepted Answer

A)  registration of the partnership with federal authorities 
B)  registration of the partnership with provincial authorities 
C)  public notification of capital contributions of the entity's general partners 
D)  public notification of the registration of the limited partnership entity

Question 11

Which of the following will result in the termination of a partnership?

Accepted Answer

A)  a change of partnership clause in a partnership agreement 
B)  the death of a partner 
C)  a capital contribution clause in a partnership agreement 
D)  a declaration

Question 12

Rose,Lily,and Fawn were shareholders in Style Co.,an incorporated company with limited liability.Each bought one-third of the shares in Style Co.for an aggregate payment of $15 000 each.The corporation borrowed $60 000 from the bank to finance its operations.The bank required personal guarantees from all shareholders for the full amount of the loan.Style Co.became insolvent,and the bank ultimately sued each of the shareholders to recover the $60 000.In receiving advice from their lawyer,what amount would he most likely indicate to be the maximum amount that could be recovered from any one of them?

Accepted Answer

A)  $0 
B)  $15 000 
C)  $20 000 
D)  $60 000

Exam 14: Business Forms and Arrangements