Chapter 1 Self-test questions

. The company is the most popular business structure. Is this statement true or false?

True

False

. Identify which one of the following statements is not true.

A sole proprietor that is a professional is known as a sole practitioner.

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

Sole proprietors own the assets of the business and are entitled to the profits that the business generates.

Sole proprietors cannot take on employees.

Sole proprietorships do not have corporate personality.

Sole proprietors are self-employed.

. How is a sole proprietorship formed?

By applying to Companies House.

By registering with HMRC as self-employed.

By commencing business and then filing a tax return with HMRC.

No formal requirements - a person can simply commence business as a sole proprietor.

. Which one of the following is not a form of UK partnership?

A corporate partnership.

A partnership.

A limited partnership.

A limited liability partnership.

. Which one of the following statements regarding a partnership is not true?

A partnership much intend to make a profit.

The agreement to form a partnership must be in writing.

The partners in a partnership are agents of each other.

A partner can be vicariously liable for the acts of other partners in the partnership.

. Does a partner of a partnership have to be a natural person?

Yes.

No.

. There are several key differences between a partnership and a limited partnership. Identify these differences.

The liability of the partners in a limited partnership can have limited liability, whereas the partners of a partnership cannot.

Limited partners cannot take part in the management of the firm, whereas the partners of a partnership can take part in management.

A limited partnership has corporate personality, whereas a partnership does not.

The partners in a partnership have unlimited liability, whereas none of the partners in a limited partnership have unlimited liability.

. Which one of the following statements is not true?

A limited liability partnership is formed by registering certain documents with Companies House.

A limited liability partnership has corporate personality.

The partners of a limited liability partnership cannot be disqualified from acting as partners of a limited liability partnership.

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

A limited liability partnership is generally regulated by company law.

. Jane and Kate wish to engage in business together. They both wish to be involved in managing the business, but are keen to minimise their liability for any debts and liabilities that the business generates. Which business structure would be most appropriate?

A sole proprietorship.

A partnership.

A limited partnership.

A limited liability partnership.

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