Deck 10: Business Organization

Question 1

A sole proprietor is responsible for all debt and liabilities of the business.

Answer 1

True

Question 2

Joint ventures are governed by applicable provincial legislation.

Answer 2

False

Question 3

One disadvantage for a sole proprietor is profits are taxed at their personal tax rate.

Answer 3

True

Question 4

A sole proprietor makes all the decisions and receives all the benefits.

Question 5

Two or more businesses carrying on an activity for a specified period of time is a joint venture.

Question 6

A sole proprietorship is one person carrying on business alone.

Question 7

Partners share ownership and responsibilities of the business.

Question 8

A sole proprietor does not have the responsibility of vicarious liability.

Question 9

A sole proprietor does not need legal assistance to register a proprietorship.

Question 10

Unlimited liability means all business and personal assets may be at risk for a business liability.

Question 11

An equity joint venture is a separate legal entity to which the individual parties contribute capital.

Question 12

Some business formations are more regulated than others.

Question 13

A contractual joint venture is based on a written agreement between the parties.

Question 14

One advantage for a sole proprietor is profits are taxed lower than their personal tax rate.

Question 15

Starting a sole proprietorship can be as simple as filing a form and paying a fee.

Question 16

A corporation is a separate legal entity distinct from its owners.

Question 17

A partnership is two or people carrying on business together with a view to sharing profits.

Question 18

A sole proprietorship is the simplest form of business formation.

Question 19

A sole proprietor is personally responsible for damages caused by employees.

Question 20

The type of business formation you chose can depend upon the nature and size of the business.

Question 21

A limited partner has an interest in the partnership but cannot make management decisions.

Question 22

Unless there is a written agreement, a partnership is subject to provincial Partnership Acts.

Question 23

Each partner is vicariously liable for the torts committed by the other partners.

Question 24

The provisions of the Partnership Act supersede the terms of a partnership agreement with respect to the rights and obligations of the partners to one another.

Question 25

A partnership is a group of people carrying on business together for the purpose of making a profit.

Question 26

A teaming arrangement is another name for an equity joint venture.

Question 27

A corporation is a separate entity with the legal abilities of a natural person.

Question 28

Sam and James opened up an accounting business together. They shared office space and administrative staff. However, they had separate clients. If Sam cheats on his client, then James is not responsible.

Question 29

A partnership agreement can modify legislative requirements for partnerships.

Question 30

You can become a partner without knowing it.

Question 31

A partner is not personally liable for the debts and obligations of the other partners.

Question 32

A limited partner is only responsible for the amount of their investment into the partnership.

Question 33

In an accounting limited liability partnership (LLP) the partnership is liable for the negligence of a partner in the performance of his or her professional duties.

Question 34

In order not to be seen as a partnership, parties to a joint venture must specifically state this in their contract.

Question 35

A contractual joint venture can be seen as a partnership.

Question 36

Limited partners may actively participate in the control of the partnership without jeopardizing their limited liability status.

Question 37

General partners are not agents for each other for the purpose of the business of the partnership.

Question 38

Partnerships are governed by federal legislation.

Question 39

Limited liability partnerships (LLP) are suitable forms of organization for professionals such as accountants and lawyers.

Question 40

A teaming arrangement is another name for a contractual joint venture.

Question 41

Where an investor is offered either common or preference shares in a corporation on otherwise equally satisfactory terms, the investor who seeks to have his or her voice heard in management will choose to invest in common shares.

Question 42

Preferred shares have no right to vote but will receive dividends before common shareholders.

Question 43

"Manufacturing" is an example of a distinctive element in a corporate name.

Question 44

A corporation must have a number or a name, but not both.

Question 45

Shareholders and directors of a corporation both have personally limited liability as against the liabilities of the corporation, but shareholders have their liability even more limited than do the directors.

Question 46

A business can incorporate either provincially or federally.

Question 47

Common shares have no voting rights but will receive dividends before preferred shareholders.

Question 48

Shares represent a shareholders' ownership interest in a corporation.

Question 49

Common shares have the right to vote and may receive dividends.

Question 50

"Manufacturing" is an example of a descriptive element in a corporate name.

Question 51

Incorporating documents set out the purpose of the business.

Question 52

A corporation is one of the most common business formations in Canada.

Question 53

A corporation wishing to do business in more than one province must register federally.

Question 54

When choosing a specific name, for a corporation, it must contain elements that are distinctive and descriptive.

Question 55

Shareholders have ownership in a corporation but not the business or assets of the corporation.

Question 56

Preferred shares have the right to vote and may receive dividends.

Question 57

Dividends are a method of distributing the profits earned by a corporation to shareholders.

Question 58

A federal corporation has the right to carry on business on any province or territory.

Question 59

Shareholders have a limited role in the management of the corporation.

Question 60

Directors' priority is to act in the best interests of the shareholders.

Question 61

Franchise is a contractual business arrangement where a franchisor grants a franchisee the right to operate a similar business.

Question 62

A shareholders' agreement can be used to determine aspects of corporate governance.

Question 63

Franchisor is the person receiving the rights under the franchise agreement.

Question 64

In order for a director of a corporation to show that she can rely on the defence of due diligence, she must exercise only the duty of care of a reasonable person.

Question 65

Franchisee is the person granting the rights under the franchise agreement.

Question 66

Franchisor is the person granting the rights under the franchise agreement.

Question 67

If a corporation does not sell shares to the general public, then it is a public corporation.

Question 68

In order for a director of a corporation to show that she can rely on the defence of due diligence, she must be knowledgeable of the prevailing environmental standards and must take clear action to prevent, report, review, and respond to danger.

Question 69

A corporation ceases to exist when the shareholders die.

Question 70

Franchisee is the person receiving the rights under the franchise agreement.

Question 71

If a corporation sells shares to the general public, then it is a public corporation.

Question 72

If a corporation sells shares to the general public, then it is a private corporation.

Question 73

A corporation is the least expensive business formation to create.

Question 74

If a corporation does not sell shares to the general public, then it is a private corporation.

Question 75

Officers of a corporation have the same fiduciary duty as directors of a corporation.

Question 76

Corporations have perpetual existence.

Question 77

Shareholder agreements are useful devices to protect the interests of minority shareholders in small private corporations.

Question 78

The greatest advantage to incorporation is the limited liability of the shareholders.

Question 79

Shareholders appoint the directors who in turn appoint the officers of the corporation.

Question 80

Many small family businesses that incorporate are considered to be private or closely held corporations.