Chapter 1 Multiple choice questions

. Which business structures are known as 'bodies corporate?'

The company and the sole proprietorship.

The company and the partnership.

The company and the limited liability partnership.

The partnership and the limited liability partnership.

The company, the partnership and the limited liability partnership.

. Which ONE of the following statements is not true?

Sole proprietors are not permitted to take on employees.

Sole proprietors can be subject to certain provisions in the Companies Act 2006.

Sole proprietors are personally liable for the debts and liabilities of the sole proprietorship.

The sole proprietor owns all the assets of the business and is entitled to all of the profits that the business generates.

Sole proprietors are self-employed.

A sole proprietor who is not a professional is known as a 'sole trader.'

. It is a prudent step to have in place, before the partnership begins trading, a written partnership agreement setting out the rights and obligations of the partner. Bearing this in mind, which ONE of the following statements is not true?

If a written partnership agreement exists, the implied terms contained in the Partnership Act 1890 will not form part of the partnership agreement.

If a written partnership agreement does not exist, then the terms implied by the Partnership Act 1890 will form terms of the partnership agreement.

If a written partnership agreement exists, the terms implied by the Partnership Act 1890 will still form part of the agreement, except where they are inconsistent with the agreement.

The terms implied by the Partnership Act 1890 can be excluded by the partnership agreement.

. There are numerous differences between a limited liability partnership and an ordinary partnership. Which ONE of the following is not a valid difference?

Limited liability partnerships are incorporated whereas ordinary partnerships are not.

An ordinary partnership is regulated by partnership law, whereas limited liability partnerships are never regulated by partnership law.

A limited liability partnership has corporate personality, whereas an ordinary partnership does not.

Partners of an ordinary partnership cannot be disqualified, whereas partners of a limited liability partnership can be.

. Which ONE of the following statements concerning the limited liability partnership is not true?

A limited liability partnership is incorporated by registering an incorporation document with the Registrar of Companies.

The partners of a limited liability partnership are known as 'members.'

A limited liability partnership has corporate personality.

A limited liability partnership cannot act ultra vires.

Once the assets of a limited liability partnership are exhausted, its members are liable for the remaining debts and liabilities of the firm.

. Companies in the UK are principally regulated by...?

The Companies Act 1985

The UK Corporate Governance Code

The Companies Act 2006

The Listing Rules

. Which ONE of the following types of company cannot lawfully be created?

A public limited company with a share capital.

A public limited company without a share capital.

A private limited company without a share capital.

A private unlimited company without a share capital.

A private limited company with a share capital.

A private unlimited company with a share capital.

. There are a number of differences between a public company and a private company. Which ONE of the following is not a valid difference?

A public company must appoint a company secretary, whereas a private company is not required to appoint a company secretary.

A private company must be formed with at least one director, whereas a public company must have at least two directors.

Private companies can be created with a trivial amount of capital, whereas public companies must have an allotted minimum share capital of £50,000.

A public company must have at least two members, whereas a private company need only have one member.

Public companies may offer their shares to the public, whereas private companies may not.

. Regarding public companies, which ONE of the following statements is true?

The majority of public companies are listed companies.

All public companies are subject to the Listing Rules.

It is impossible to create a public company limited by guarantee with a share capital.

A public company is defined as any company that is not a private company.

All public companies should comply with the UK Corporate Governance Code, or explain why they have failed to comply with the Code.

. What is 'limited liability?'

Limited liability refers to how much the directors have to contribute in the event of the company becoming insolvent.

Limited liability refers to the ability of a member to limit his liability.

Limited liability refers to the directors' ability to limit their liability for acts of negligence, fraud etc.

Limited liability refers to the ability of a company to limit its liability.

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