Question 1

Identify the basic issues that should be expressly addressed in a partnership agreement, including the description of each respective clause. Lastly, indicate when a partnership agreement would have to be revisited.

Accepted Answer

The answer of Identify the basic issues that should be...

Question 2

Identify the situations in which a court applying the Partnership Act would find a relationship to be something other than a partnership.

Accepted Answer

The answer of Identify the situations in which a court...

Question 3

What possible advantages of each form of business vehicle should an entrepreneur contrast when attempting to achieve the profit motive?

Accepted Answer

A)  marginal personal tax rate versus prime corporate tax rate 
B)  prime personal tax rate versus marginal corporate tax rate 
C)  personal tax rate versus marginal corporate tax rate 
D)  marginal personal tax rate versus corporate tax rate

Question 4

In the context of a business failure, a bankrupt sole proprietor's diminished credit rating will likely be enduring.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a distinguishing characteristic of a product licensing arrangement?

Accepted Answer

A)  The contract typically provides for sharing of profits and losses. 
B)  It licenses proprietary rights within a specified territory. 
C)  It licenses the use of the principal/agent relationship. 
D)  The contract typically specifies the absence of an agency relationship.

Question 6

Gerald and Tanji are general partners in a partnership with Mafasa and Rolf, who are also partners but with narrowly defined rights. What disadvantage do Mafasa and Rolf share?

Accepted Answer

A)  Their losses as limited partners are restricted to their capital investments. 
B)  What constitutes partaking in management is difficult to define. 
C)  Participation in management activities will risk their unlimited liability status. 
D)  Public notification of their identity and the amount of capital contribution is required.

Question 7

Briefly discuss the liability of the partners for a breach of contract, including, among other things, the key point from this perspective.

Accepted Answer

The answer of Briefly discuss the liability of the partners...

Question 8

Which of the following would pertain to provincial partnership legislation relating to the relationship between business partners and outsiders?

Accepted Answer

A)  regulatory provisions 
B)  ostensible provisions 
C)  mandatory provisions 
D)  optional provisions

Question 9

What is the most likely reason, from a financial liability perspective, for a corporation to be viewed as the most risk-aversive form of business entity?

Accepted Answer

A)  It forms a distinct legal entity, liable for its own obligations. 
B)  Any entity that deals with a corporation may demand personal guarantees. 
C)  It shields directors from negligent acts of management. 
D)  It provides limited liability to the corporation's directors.

Question 10

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 11

What are the most likely sources of regulation a partnership must be aware of as it conducts its business each day?

Accepted Answer

A)  contract, agency, and corporate law 
B)  partnership, employment, and application law 
C)  agency, contract, and partnership law 
D)  contract, employment, and application law

Question 12

Which of the following is an advantage of a partnership over a sole proprietorship?

Accepted Answer

A)  the potential to successfully achieve management by consensus 
B)  the potential of each partner to devote significant attention to the business 
C)  the potential to share all profits as partners see fit 
D)  the potential for a stronger management base

Question 13

Which of the following would most likely be a requirement of provincial legislation with respect to a limited liability partnership?

Accepted Answer

A)  liability insurance to compensate victims for loss 
B)  the use of "limited partnership" or "LP" in the firm name 
C)  a business licence in the partnership name 
D)  access to partners' personal assets to satisfy claims

Question 14

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 15

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?

Accepted Answer

A)  $0 
B)  $10 000 
C)  $12 500 
D)  $20 000

Question 16

Briefly discuss the requirements for the creation of a limited liability business entity, including an explanation of the important effects meeting the requirements will have.

Accepted Answer

The answer of Briefly discuss the requirements for the creation...

Question 17

List at least 6 of the 10 optional rules prescribed by the Partnership Act in each province with respect to the relations between partners.

Accepted Answer

The answer of List at least 6 of the 10...

Question 18

The potential for a board management base that exists in the corporation creates many levels of authority that can be an impediment to decision making.

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

A)  a partnership agreement clause pertaining to dissolution of partnership 
B)  a partnership agreement clause pertaining to changes in partnership 
C)  a clause in a partnership agreement that addresses profit distribution 
D)  a clause in a partnership agreement that avoids litigation and animosity

Question 20

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.

Exam 14: Business Forms and Arrangements

Identify the basic issues that should be expressly addressed in a partnership agreement, including the description of each respective clause. Lastly, indicate when a partnership agreement would have to be revisited.

Identify the situations in which a court applying the Partnership Act would find a relationship to be something other than a partnership.

What possible advantages of each form of business vehicle should an entrepreneur contrast when attempting to achieve the profit motive?

In the context of a business failure, a bankrupt sole proprietor's diminished credit rating will likely be enduring.

Which of the following is a distinguishing characteristic of a product licensing arrangement?

Gerald and Tanji are general partners in a partnership with Mafasa and Rolf, who are also partners but with narrowly defined rights. What disadvantage do Mafasa and Rolf share?

Briefly discuss the liability of the partners for a breach of contract, including, among other things, the key point from this perspective.

Which of the following would pertain to provincial partnership legislation relating to the relationship between business partners and outsiders?

What is the most likely reason, from a financial liability perspective, for a corporation to be viewed as the most risk-aversive form of business entity?

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?

What are the most likely sources of regulation a partnership must be aware of as it conducts its business each day?

Which of the following is an advantage of a partnership over a sole proprietorship?

Which of the following would most likely be a requirement of provincial legislation with respect to a limited liability partnership?

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

Briefly discuss the requirements for the creation of a limited liability business entity, including an explanation of the important effects meeting the requirements will have.

List at least 6 of the 10 optional rules prescribed by the Partnership Act in each province with respect to the relations between partners.

The potential for a board management base that exists in the corporation creates many levels of authority that can be an impediment to decision making.

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?

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?