Question 1

Securities regulations are a federal responsibility.

Accepted Answer

A) True 
 B)False

Question 2

Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

Accepted Answer

The answer of Explain the significance of the determination that...

Question 3

With regard to the liability of partners,which of the following is true?

Accepted Answer

A) A general partner who retires from the partnership by giving notice of his leaving to the other partners could still be found liable for debt pursuant to a contract made when he was a partner. 
B) A limited partner has unlimited liability beyond the amount of his initial investment. 
C) A general partner has limited liability for any loss suffered because of the negligent act (e.g.,omission)of one of his partners. 
D) A general partner could not be liable for losses suffered by a client because of misapplication of funds unless he knew about or took part in the misapplication. 
E) The partnership,and thus the partners,are liable for any loss suffered because of a tort committed by its employee outside the course of his employment.

Question 4

A broadly held corporation has fewer and less stringent reporting and accounting requirements than a closely held corporation.

Accepted Answer

A) True 
 B)False

Question 5

Joe sold Harry his barber shop for $100 000.He was paid $20 000 in cash,the other $80 000 to be paid by Harry giving Joe 20% of the profits of the business until the amount is paid off.Unfortunately,a customer,Sam,is injured by Harry,who manages to cut off Sam's right ear while shaving him.Sam sues both Harry and Joe.Explain his likelihood of success.

Accepted Answer

The answer of Joe sold Harry his barber shop for...

Question 6

Dennis,Sam,George,and Ray were partners in an accounting business,and Ray decided he wanted to retire.He sold his share of the partnership to Leonardo,but Leonardo is not a partner unless the other partners approve the change.

Accepted Answer

A) True 
 B)False

Question 7

The unlimited liability of partners means that not only can they lose their entire investment in the business,but their personal assets (such as their homes and cars)are also at risk.

Accepted Answer

A) True 
 B)False

Question 8

Dave and his sister Chris make unusual kites.They both create the designs and Dave makes the patterns.Friends have always wanted to buy their kites.After Chris completes a post-secondary marketing program,she begins to talk to Dave about going into business selling kites.Ed,a friend of Chris,wants to be involved.He says he could buy the supplies and do other odd chores.They decide to try to make a go of it and to share the profits as follows: Dave,35%; Chris,35%; and Ed,30%.Things go well for seven months.They even hire George to deliver kites to the increased number of stores buying them.Unfortunately for the business,Chris and Ed become romantically involved.This is followed by a heated dispute.Ed disappears with $1300 collected from customers and $600 worth of supplies,which he had bought on behalf of the business from its regular supplier.At about the same time,George negligently breaks a customer's $200 lamp while delivering a kite.On these facts,which of the following is true?

Accepted Answer

A) If the partnership funds are not sufficient to pay the partnership debts,the creditors can look to the individual partners for payment. 
B) Although George broke the lamp while delivering a kite,the partners are not liable because it was George's own fault. 
C) When Ed buys supplies for the business on credit,he is acting as an agent for the business and he alone is liable for those debts. 
D) Only Chris would be responsible for Ed's misapplication of the customers' money. 
E) Since Dave,Chris,and Ed did not sign a partnership agreement,they are not considered a general partnership.

Question 9

The partners can change the terms of their responsibilities to each other in the partnership agreement,but not in relationship to their obligations to third parties.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an example of a breach of a fiduciary duty?

Accepted Answer

A) A partner in a firm learned of a business forced to sell some heavy equipment.Although the partnership could have used the equipment,he bought and sold it at a substantial profit before the partnership was given a chance to buy it. 
B) A shareholder of ABC Ltd.,a trucking corporation whose shares are listed on the Vancouver Stock Exchange,is working as an employee for ABC Ltd.'s competitor,Jonstone Trucking. 
C) A shareholder of a corporation voted in favour of an acquisition by the corporation at the annual general meeting because he secretly had an interest in the corporation being purchased. 
D) The directors of the corporation,contrary to a request made by the shareholders,refused to declare dividends. 
E) A promoter of a corporation sold property to the corporation for four times what he had paid for it after he made full disclosure of his interest to an independent board of directors,which voted for the purchase.

Question 11

Explain the regulation environment in Canada related to the purchase,sale,and promotion of shares and other financial vehicles (i.e.,securities).

Accepted Answer

The answer of Explain the regulation environment in Canada related...

Question 12

A partnership can always be brought to an end by the service of notice on the other partners,no matter what the partnership agreement says.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

Accepted Answer

The answer of Discuss the role of the Partnership Act...

Question 14

Which of the following will establish the existence of a partnership?

Accepted Answer

A) The goodwill portion of the sale of a business is repaid by a share of the profits. 
B) An employee receives a profit-sharing bonus. 
C) The beneficiary of a deceased partner takes that partner's share of the income from the partnership. 
D) The parties intend to share the expenses of the business. 
E) A debt is repaid by the creditor taking a share of the profits.

Question 15

Shareholders do not owe a duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 16

Joe and Sam set up an import/export business in partnership,but they need extra money.Harry is invited to invest as a limited partner.Unfortunately,the business begins to lose money because of the poor business sense of Joe and Sam.Harry has the business expertise to turn the business around,or at least he thinks so.What would your advice be to Harry in these circumstances?

Accepted Answer

The answer of Joe and Sam set up an import/export...

Question 17

Explain the standard of care that a director must live up to in carrying out his duty toward the corporation.

Accepted Answer

The answer of Explain the standard of care that a...

Question 18

Partners are vicariously liable for the wrongful acts of employees committed on partnership business.

Accepted Answer

A) True 
 B)False

Question 19

Recent changes in partnership law allow partnerships to be registered as a "limited liability partnership" or LLP.When carrying on business as a limited liability partnership,non-negligent partners stand to lose:

Accepted Answer

A) their investment in the firm. 
B) all of their personal assets if a successful claim is brought against the partnership on the basis of another partner's mistake. 
C) absolutely nothing. 
D) all of their personal assets except those protected from seizure under bankruptcy legislation. 
E) assets jointly held with a spouse.

Question 20

Joe and Mary promote several dances at school and split the profits.Will this be enough to establish a partnership?

Accepted Answer

The answer of Joe and Mary promote several dances at...

Exam 7: Methods of Carrying on Business

Securities regulations are a federal responsibility.

Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

With regard to the liability of partners,which of the following is true?

A broadly held corporation has fewer and less stringent reporting and accounting requirements than a closely held corporation.

Dennis,Sam,George,and Ray were partners in an accounting business,and Ray decided he wanted to retire.He sold his share of the partnership to Leonardo,but Leonardo is not a partner unless the other partners approve the change.

The unlimited liability of partners means that not only can they lose their entire investment in the business,but their personal assets (such as their homes and cars)are also at risk.

The partners can change the terms of their responsibilities to each other in the partnership agreement,but not in relationship to their obligations to third parties.

Which of the following is an example of a breach of a fiduciary duty?

Explain the regulation environment in Canada related to the purchase,sale,and promotion of shares and other financial vehicles (i.e.,securities).

A partnership can always be brought to an end by the service of notice on the other partners,no matter what the partnership agreement says.

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

Which of the following will establish the existence of a partnership?

Shareholders do not owe a duty to the corporation.

Explain the standard of care that a director must live up to in carrying out his duty toward the corporation.

Partners are vicariously liable for the wrongful acts of employees committed on partnership business.

Recent changes in partnership law allow partnerships to be registered as a "limited liability partnership" or LLP.When carrying on business as a limited liability partnership,non-negligent partners stand to lose:

Joe and Mary promote several dances at school and split the profits.Will this be enough to establish a partnership?