Business Partnership Quiz

The board of directors is the group of individuals elected by the shareholders of a corporation to oversee and make decisions regarding the management of the company. They are responsible for setting corporate policies, making strategic decisions, and appointing and supervising the executive management team. The board of directors holds the ultimate authority in matters related to the regular and business affairs of the corporation, making it the supreme authority in corporate management. Therefore, the board of directors is the correct answer in this case.

Shareholders are the owners of a stock corporation. They hold shares in the company and have the right to vote on important matters, such as electing the board of directors and approving major corporate decisions. Unlike incorporators and promoters, who are involved in the initial formation of the corporation, shareholders can be individuals or other entities that have purchased shares in the company. Members, on the other hand, typically refer to individuals who are part of a different type of organization, such as a membership-based association or club. Therefore, shareholders is the most appropriate term to describe the corporators in a stock corporation.

The partnership may come to an end due to various reasons, including the insolvency of a partner, the insanity of a partner, or the death of a partner. In the case of insolvency, if a partner becomes unable to fulfill their financial obligations, it may lead to the dissolution of the partnership. Similarly, if a partner becomes mentally incapable of carrying out their duties, it can also result in the termination of the partnership. Additionally, the death of a partner can automatically dissolve the partnership, as it affects the continuity and functioning of the business. Therefore, any of these events can lead to the end of a partnership.

In the absence of an agreement, profit and loss are divided by partners in the ratio of their capital contributions. This means that the partners will receive a share of the profit or bear a share of the loss based on the amount of capital they have invested in the business. The partners with higher capital contributions will receive a larger share of the profit and will also bear a larger share of the loss, while partners with lower capital contributions will receive a smaller share of the profit and bear a smaller share of the loss.

When a partner withdraws from a partnership, it leads to the dissolution of the partnership. This is because a partnership is based on the agreement and participation of all partners. When one partner chooses to leave, it disrupts the balance and functioning of the partnership, resulting in its dissolution. The remaining partners may choose to continue the business or wind up the partnership and distribute the remaining assets among themselves.

When a partnership firm is dissolved, any loss on realization is distributed among the partners according to their profit and loss ratio. This means that partners who have a higher share in the profits will also bear a higher share of the losses. This method ensures that the distribution is fair and reflects the partners' respective contributions to the partnership.

When a partner withdraws from a partnership, it results in the dissolution of the partnership. This is because a partnership is an agreement between two or more individuals to carry on a business together, and when one partner leaves, the partnership can no longer continue in its original form. The remaining partners may choose to form a new partnership or dissolve the existing one and distribute the remaining assets among themselves.

The correct answer is "right of succession." This refers to the legal right of a corporation to continue its existence even after the death of a shareholder. It means that the corporation can still operate and carry out its business activities as a separate legal entity, regardless of any changes in ownership due to the death of a shareholder.

The correct answer is "corporators". In the context of a corporation, corporators are the individuals who form or establish the corporation. They can be shareholders or members of the corporation. The term "incorporators" is also sometimes used interchangeably with "corporators" to refer to the same group of individuals. "Promoters" are individuals who promote or initiate the formation of a corporation, but they may not necessarily be the same as the corporators. "Subscribers" typically refer to individuals who subscribe to or purchase shares or membership in a corporation. Therefore, the correct term for the persons who compose the corporation is "corporators".

When a partner is unable to clear their debts on dissolution, the other partners are responsible for clearing these debts. The debts should be cleared in accordance with the partnership profit/loss sharing ratio. This means that each partner will contribute to the debt repayment based on their agreed share of profits and losses in the partnership. The answer states that the debts should not be cleared by other partners, indicating that the responsibility lies solely with the partners in proportion to their profit/loss sharing ratio.

Par value is the arbitrary value assigned to a share of stock. It is a nominal value that is determined by the company and is printed on the stock certificate. Par value has no relation to the market value of the stock and is mainly used for accounting and legal purposes. It represents the minimum price at which a share can be issued and does not reflect the actual worth of the stock.

In a partnership liquidation, the assets of the partnership are distributed in a specific order. The first priority is to pay off the debts owed to outside creditors. These are individuals or entities that have provided goods, services, or loans to the partnership but are not partners themselves. By prioritizing the payment of outside creditors, the partnership ensures that its obligations to external parties are fulfilled before distributing any remaining assets to the partners. This is important for maintaining the partnership's reputation and financial integrity.

A corporation has the advantage over a partnership because it has the power of succession, meaning that the death of a shareholder will not dissolve the corporation. Additionally, a corporation's management is centralized on the board of directors, providing a clear and efficient decision-making structure. Shareholders in a corporation also have limited liability, meaning their personal assets are protected in the event of the corporation's debts or legal issues. Lastly, shareholders in a corporation are not general agents of the business, which means they are not personally responsible for the corporation's actions or obligations. Therefore, all of the given options are advantages of a corporation over a partnership.

When a partner is insolvent, his personal properties will be distributed to the partners by way of additional contributions only if the assets of the partnership are not enough to settle all obligations. This means that the remaining partners will have to contribute more money or assets in order to cover the insolvent partner's share of the obligations. This distribution method ensures that all obligations are settled and the partnership can continue its operations.

When a new partner is admitted to a firm, it is dissolved. This means that the existing partnership is terminated, and a new partnership is formed with the inclusion of the new partner. The dissolution allows for the redistribution of assets, liabilities, and profits among the partners, and the creation of a new partnership agreement. Therefore, the admission of a new partner leads to the dissolution of the existing partnership.

The negative capital balance of a partner will not result in the dissolution of a partnership. A negative capital balance indicates that the partner has withdrawn more from the partnership than their share of profits, resulting in a deficit. While it may affect the partner's financial standing within the partnership, it does not automatically dissolve the partnership. Dissolution typically occurs due to events such as the death or incapacity of a partner, bankruptcy of a partner, or mutual agreement among the partners.

In a partnership liquidation, if one partner's capital account has a deficit balance, it means that partner owes more to the partnership than their capital contribution. To rectify this, the partner with the deficit should contribute enough personal assets to cover the deficit and eliminate the negative balance. This ensures that all partners' capital accounts reflect their actual contributions and liabilities.

In a partnership liquidation, the assets of the partnership are distributed to various parties in a specific order. The correct answer states that the assets shall be applied lastly to those owing to the partners with respect to their share of the profits. This means that after all outside creditors and partners' capital contributions have been paid, any remaining assets will be distributed to the partners based on their respective share of the profits. This ensures that the partners receive their rightful portion of the profits before any remaining assets are distributed to inside creditors.

The correct answer is Ms. Rachel Grace M. Dela Cruz.

A pre-emptive right refers to the right of shareholders to maintain their proportionate ownership in a corporation by subscribing to newly issued shares before they are offered to the public. This right allows shareholders to protect their equity in the company and ensures that their standing and control within the corporation remains proportional to their existing shares. It is an equitable measure that prevents dilution of existing shareholders' ownership and maintains fairness in the distribution of newly issued shares.

No par value shares cannot be issued for less than P5.00 because they do not have a specified minimum value. They also cannot have preferences as to assets or dividends because they do not have a stated value or fixed dividend rate. Additionally, they cannot be issued without being fully paid because there is no par value to determine the amount that needs to be paid for each share. Therefore, all of the given options are correct explanations for why no par value shares cannot be issued.

In a corporation, the right to vote is typically given to shareholders who hold common shares. Common shares represent ownership in the company and typically come with voting rights. Shareholders who hold preferred shares may have certain financial benefits, but they may not have the right to vote. Therefore, the correct answer is "Shareholders-common shares."

The correct answer is "partnership liabilities, partnership loans, and partnership capital balances." This means that when a partnership is liquidated, the first priority is to pay off any outstanding liabilities, followed by any loans taken by the partnership. Finally, the remaining funds will be distributed among the partners based on their capital balances. This sequence ensures that the partnership's obligations are fulfilled before any distribution of capital to the partners.

When a partner is insolvent, his personal properties are distributed to separate creditors. This means that the partner's personal assets will be used to settle any outstanding debts owed to creditors who are not associated with the partnership. This distribution is prioritized over any obligations owed to the partnership or partnership creditors.

In partnership, a new partner can only be admitted if he is a general partner. This means that the new partner must have unlimited liability and be actively involved in the management and decision-making of the partnership. Limited partners, on the other hand, have limited liability and are not involved in the day-to-day operations of the partnership. Industrial partners refer to partners who contribute their expertise or resources to the partnership but may not have liability or management responsibilities. Therefore, the correct answer is general partner, as the other options do not fulfill the criteria for admitting a new partner.