Intro to Business Law Flashcards
Which of the following correctly sets out the business models in which participants are not generally liable for the debts or liabilities of the business?
(a)
LLPs and companies
(b)
LLPs, partnerships and companies.
(c)
LLPs only.
(d)
Partnerships and sole traders.
(e)
Companies only
(a) LLPs and companies
Which of the following best describes the key advantages of the company business model?
(a)
A company is a separate legal entity and the shareholders have limited liability.
(b)
A company is a separate legal entity, shareholders have limited liability and there is more flexibility in raising finance since companies may issue shares to raise money and can also provide security to lenders.
(c)
Companies have more flexibility in raising finance since they may issue shares to raise money and can also provide security to lenders.
(d)
A company is a separate legal entity and the shareholders have limited liability. There is no requirement for publicly filed accounts.
(b) A company is a separate legal entity, shareholders have limited liability and there is more flexibility in raising finance since companies may issue shares to raise money and can also provide security to lenders.
Two women are setting up a business together. They are primarily concerned with their ability to raise finance and limiting their own personal liabilities as investors. They also do not want to spend lots of money setting up the business.
Which of the following is the best advice to the women in terms of the most suitable business model to use for their new business?
(a) They should incorporate an LLP. Whilst there are costs involved in setting up the company, they will enjoy limited personal liability and be able to issue shares and take out bank loans in the LLP’s name.
(b)
The women should incorporate an LLP. They will enjoy limited personal liability.
(c)
They should incorporate a private limited company. Whilst there are costs involved in setting up the company, they will enjoy limited personal liability and have a choice of finance options.
(d)
They should trade as a traditional partnership. It is free to set up and the partnership has the ability to take out loans.
(c) They should incorporate a private limited company. Whilst there are costs involved in setting up the company, they will enjoy limited personal liability and have a choice of finance options.
Which of the following correctly describes the structure and tax position of an LLP?
(a)
An LLP has a separate legal personality. The partners are taxed as individuals on their shares of the profits and gains.
(b)
An LLP is not a separate entity from its partners. The partners are taxed as individuals on their shares of the profits and gains.
(c)
An LLP is not a separate entity from its partners. The LLP pays corporation tax on the partnership profits.
(d)
An LLP has a separate legal personality. The LLP pays income tax on its profits and capital gains tax on its gains.
(e)
An LLP has a separate legal personality. The partners pay corporation tax on the partnership profits.
(a) An LLP has a separate legal personality. The partners are taxed as individuals on their shares of the profits and gains.
Which one of the following correctly describes the structure and tax position of a traditional partnership?
(a)
A partnership is not a separate entity from its partners and the partners are taxed as individuals.
(b)
A partnership has a separate legal personality. The partnership pays corporation tax on the partnership profits.
(c)
A partnership has a separate legal personality and the partners are taxed as individuals.
(d)
A partnership has a separate legal personality. The partnership pays income tax on the partnership profits.
(a) A partnership is not a separate entity from its partners and the partners are taxed as individuals.
What is meant by “double taxation of profits” in the context of a company?
(a)
The company pays capital gains tax on its profits before the payment of dividends to its shareholders. The individual shareholders who receive the dividends will pay income tax on the amount of the dividend.
(b)
The company pays income tax on its profits before the payment of dividends to its shareholders. The individual shareholders who receive the dividends will pay income tax on the amount of the dividend.
(c)
The company pays corporation tax on its profits before the payment of dividends to its shareholders. The individual shareholders who receive the dividends will pay income tax on the amount of the dividend.
(d)
The company pays corporation tax on its profits before the payment of dividends to its shareholders. The individual shareholders who receive the dividends will pay capital gains tax on the amount of the dividend.
(c) The company pays corporation tax on its profits before the payment of dividends to its shareholders. The individual shareholders who receive the dividends will pay income tax on the amount of the dividend.
