Question 1

A sole proprietor is responsible not only for his own conduct but also for the wrongful conduct of any employee done in the course of employment.

Accepted Answer

As the sole proprietor of a business, he or she has complete responsibility for the actions of any employees working on behalf of the business. This is because of the legal principle of vicarious liability, which holds employers responsible for the actions of their employees when they are acting within the scope of their employment.

Question 2

Which of the following is correct with respect to sole proprietorships?
A)The sole proprietorship is a separate legal entity.
B)A sole proprietorship exists where two or more people carry on business together with a view toward profits.
C)The sole proprietor has limited liability.
D)The sole proprietor has unlimited liability.
E)A sole proprietorship must be incorporated.

Accepted Answer

A sole proprietorship is not a separate legal entity, and instead is an unincorporated business owned and run by one individual. The sole proprietor has unlimited liability, meaning they are personally responsible for all debts and legal issues related to the business. A sole proprietorship does not require incorporation.

Question 3

In which of the following is there not a fiduciary duty owed?
A)officer of a company to the company
B)partners to each other
C)manager to employer
D)agent to her principal
E)director to shareholders

Accepted Answer

Directors owe fiduciary duties to the company itself, not directly to the shareholders.

Question 4

A sole proprietor is free from regulatory control.

Accepted Answer

As a sole proprietor, one is still subject to various regulations and laws depending on the industry and location of the business. These can include licensing requirements, taxes, zoning laws, health and safety regulations, and more.

Question 5

"As in other forms of business,when decisions are to be taken,the majority of the partners must approve the decision." Discuss the accuracy of this statement.

Accepted Answer

The answer of "As in other forms of business,when decisions...

Question 6

Adams was approached by a Mr.McCarthy of XYZ Co.,who requested that Adams pay $10 000 to extinguish a debt owed by the partnership of Adams and Jefferson.Adams denied the partnership and the liability.In asserting his claim,McCarthy cited the following facts,all of which he could prove.Which of these facts is the strongest evidence of the existence of a partnership?
A)Adams and Jefferson co-owned property.
B)Adams and Jefferson shared gross returns from a business.
C)Adams and Jefferson worked together for a non-profit charity.
D)Adams received a commission from Jefferson based on the sale price of the goods sold by Adams for Jefferson.
E)Adams and Jefferson shared the profits from a business.

Accepted Answer

Sharing profits from a business is the strongest evidence of the existence of a partnership as it indicates a joint venture in which both parties have contributed to the business and are entitled to a share of the profits. The other options may suggest a joint ownership or collaboration, but they do not necessarily indicate a partnership.

Question 7

Which one of the following statements is correct with respect to sole proprietorships?
A)The sole proprietor is restricted to service-type businesses.
B)A sole proprietorship involves limited liability.
C)The sole proprietor is a society under the Societies Act.
D)A sole proprietorship involves unlimited liability for the proprietor.
E)A sole proprietorship is a separate legal entity with one shareholder.

Accepted Answer

A sole proprietorship involves unlimited liability for the proprietor, meaning the owner is personally responsible for all debts and obligations of the business. Choice A is incorrect because sole proprietors can operate a variety of businesses, not just service-type ones. Choice B is incorrect because there is no limited liability protection for sole proprietors. Choice C is incorrect because a sole proprietorship is not a society under the Societies Act. Choice E is incorrect because a sole proprietorship is not a separate legal entity, meaning the business and owner are not legally distinct.

Question 8

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 9

Which one of the following situations will result in a partnership existing? Assume that no corporation has been created.
A)Joe and Mary own a house together and share the income from it.
B)A lawyer and a real estate agent split a commission.
C)Employees are given bonuses because of increased profits.
D)Joe pays back a debt to Harry by giving Harry a percentage of the profits from his business.
E)Joe and Mary own a shoe store together and share the profits.

Accepted Answer

Joe and Mary owning a shoe store together and sharing the profits constitutes a partnership. The other options do not involve a shared business or joint endeavors, which are necessary for a partnership to exist.

Question 10

Which of the following statements best describes a partnership?
A)Partnership involves two or more persons carrying on business with a view toward profits.
B)Partnerships are created when two or more persons specifically agree to be in partnership.
C)Partnerships are like any other form of contract; they can only be created when there is consensus between the parties in the form of offer and acceptance to that effect.
D)Partnerships involve limited liability.
E)Partnerships are only created when they have been properly registered with the government.

Accepted Answer

A partnership is a business structure where two or more individuals come together to carry on a trade or business with a view to making a profit. The partnership is not a legal entity and each partner is personally liable for the debts and obligations of the partnership.

Question 11

Which of the following is the proper definition of a partnership as set out in the Partnership Act?
A)Partnership exists where two or more persons carry on business in common with a view to profit.
B)A partnership exists only where two or more people enter into a written agreement to be partners.
C)A partnership is created where a corporation with shareholders is registered with the federal government.
D)A partnership is only created where the partners actually share the profits from a business.
E)A partnership exists where any business is carried on with a view toward profits.

Accepted Answer

The Partnership Act defines a partnership as a relationship between two or more persons who are carrying on a business in common with a view to profit. This definition does not require a written agreement, registration with the government, or sharing of profits.

Question 12

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?
A)No major decision can be taken without a majority vote agreement of all partners.
B)Only the partners that have contributed the largest capital amount have the right to share in management.
C)All profits are shared equally among the partners.
D)A partner can sell her share of the partnership to another person without the agreement of the other partners.
E)Personal expenses incurred by the partners in the course of business are reimbursed.

Accepted Answer

The principle of equality in sharing profits is one of the fundamental characteristics of a partnership unless otherwise agreed upon in the partnership agreement. Therefore, all profits earned by the partnership must be shared equally among the partners.

Question 13

When the partners fail to register their partnership,they can neither sue nor be sued.

Accepted Answer

Partners can still sue and be sued even if they fail to register their partnership. However, registering the partnership provides legal recognition and may provide additional benefits and protections.

Question 14

Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation.

Accepted Answer

The answer of Discuss the advantages and disadvantages of partnership...

Question 15

Which one of the following statements is correct with respect to sole proprietorships?
A)The sole proprietor has the same extent of liability as a shareholder.
B)The sole proprietor must consult with the other owners before making any major decisions regarding the business.
C)The sole proprietor is responsible for the torts committed by an employee that take place within the scope of employment.
D)The sole proprietor need not adhere to any licensing and government regulations.
E)The sole proprietor has limited liability.

Accepted Answer

The sole proprietor is personally liable for the torts committed by an employee within the scope of employment. Options A, B, and D are incorrect. The sole proprietor has unlimited liability, and does not have other owners to consult with. They must adhere to licensing and government regulations. Option E is also incorrect, as the sole proprietor has unlimited liability.

Question 16

Distinguish between a sole proprietorship and a corporation.

Accepted Answer

The answer of Distinguish between a sole proprietorship and a...

Question 17

The biggest issue for a sole proprietor is unlimited liability.

Accepted Answer

Sole proprietorship offers no separation between personal and business assets, and as such, the owner is liable for all debts and losses incurred by the business. This means that creditors can go after the owner's personal assets, including savings, home, car, and even retirement accounts if the business is unable to pay its debts or faces a lawsuit.

Question 18

A sole proprietor carries on business alone and cannot employ others in the process.

Accepted Answer

A sole proprietorship can hire employees.

Question 19

Distinguish between a partnership and a corporation.

Accepted Answer

The answer of Distinguish between a partnership and a corporation....

Question 20

What are the advantages and disadvantages of being a sole proprietor?

Accepted Answer

The answer of What are the advantages and disadvantages of...

Quiz 7: Methods of Carrying on Business

A sole proprietor is responsible not only for his own conduct but also for the wrongful conduct of any employee done in the course of employment.

Which of the following is correct with respect to sole proprietorships?

In which of the following is there not a fiduciary duty owed?

A sole proprietor is free from regulatory control.

"As in other forms of business,when decisions are to be taken,the majority of the partners must approve the decision." Discuss the accuracy of this statement.

Which one of the following statements is correct with respect to sole proprietorships?

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

Which one of the following situations will result in a partnership existing? Assume that no corporation has been created.

Which of the following statements best describes a partnership?

Which of the following is the proper definition of a partnership as set out in the Partnership Act?

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?