Question 1

In which of the following situations will a director be found to have breached their duty to exercise discretion?

Accepted Answer

A) The director has put themselves in a situation where their duties to the company and their personal duties conflict. 
B) The director has agreed to vote in a certain way at future board meetings. 
C) The director has done something which no reasonable director could regard as being in the interests of the company. 
D) The director has exercised one of their powers primarily in order to gain some private advantage. 
A) The director has put themselves in a situation where their duties to the company and their personal duties conflict. 
B) The director has agreed to vote in a certain way at future board meetings. 
C) The director has done something which no reasonable director could regard as being in the interests of the company. 
D) The director has exercised one of their powers primarily in order to gain some private advantage.

Question 2

A company differs from a sole trader and partnership in that it has a perpetual existence.

Accepted Answer

A) True 
 B)False

Question 3

What is a prospectus?

Accepted Answer

A prospectus is a legal document which i

Question 4

Which of the following is a disadvantage of using a company as a business structure?

Accepted Answer

A) The company can be sued. 
B) Perpetual succession. 
C) The establishment cost and ongoing fees. 
D) The rate of tax payable by the company on its profits. 
A) The company can be sued. 
B) Perpetual succession. 
C) The establishment cost and ongoing fees. 
D) The rate of tax payable by the company on its profits.

Question 5

A director in breach of s 588G may be personally liable for the company's debts.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT an advantage of incorporation for members of an association?

Accepted Answer

A) The association can enter into contracts. 
B) The association is permitted to distribute its profits to members. 
C) The association can sue and be sued in its own name. 
D) The association has perpetual succession. 
A) The association can enter into contracts. 
B) The association is permitted to distribute its profits to members. 
C) The association can sue and be sued in its own name. 
D) The association has perpetual succession.

Question 7

An association of less than 20 people formed for trading purposes will be regulated by:

Accepted Answer

A) the Associations Incorporation Act of the relevant state or territory. 
B) the Partnership Act of the relevant state or territory. 
C) the common law. 
D) the Corporations Act 2001 (Cth). 
A) the Associations Incorporation Act of the relevant state or territory. 
B) the Partnership Act of the relevant state or territory. 
C) the common law. 
D) the Corporations Act 2001 (Cth).

Question 8

The advantage of putting a company into administration is that it:

Accepted Answer

A) results in a better return for creditors. 
B) results in a better return for members on a winding up. 
C) provides a defence against an action for breach of s 588G. 
D) all of the above. 
A) results in a better return for creditors. 
B) results in a better return for members on a winding up. 
C) provides a defence against an action for breach of s 588G. 
D) all of the above.

Question 9

Which of the following types of company are required to have the letters 'Ltd' after their name,either alone or with other letters?

Accepted Answer

A) No-liability companies. 
B) Companies limited by shares. 
C) Unlimited liability companies. 
D) Companies limited by guarantee. 
A) No-liability companies. 
B) Companies limited by shares. 
C) Unlimited liability companies. 
D) Companies limited by guarantee.

Question 10

In relation to the decision in Industrial Equity Ltd v Blackburn [1977] HCA 59 which of the following statements is NOT correct?

Accepted Answer

A) Holding and subsidiary companies have separate legal obligations. 
B) A holding company must pay tax on the dividends of a subsidiary. 
C) A holding company can pay a dividend out of a subsidiary company's profits. 
D) A holding company is a separate legal entity from a subsidiary. 
A) Holding and subsidiary companies have separate legal obligations. 
B) A holding company must pay tax on the dividends of a subsidiary. 
C) A holding company can pay a dividend out of a subsidiary company's profits. 
D) A holding company is a separate legal entity from a subsidiary.

Question 11

Limited liability is a key advantage of incorporation.

Accepted Answer

A) True 
 B)False

Question 12

A large proprietary company is one that has:

Accepted Answer

A) gross assets of more than $12.5 million at the end of the financial year. 
B) 50 or more full-time employees at the end of the financial year. 
C) a gross operating revenue of more than $25 million for the financial year. 
D) any two of the above. 
A) gross assets of more than $12.5 million at the end of the financial year. 
B) 50 or more full-time employees at the end of the financial year. 
C) a gross operating revenue of more than $25 million for the financial year. 
D) any two of the above.

Question 13

Which of the following accurately describes 'replaceable rules'?

Accepted Answer

A) The rules governing the content of a prospectus. 
B) The internal management rules contained in the company's constitution. 
C) Internal management rules contained in the Corporations Act 2001 (Cth). 
D) The rules governing the employment of company managers. 
A) The rules governing the content of a prospectus. 
B) The internal management rules contained in the company's constitution. 
C) Internal management rules contained in the Corporations Act 2001 (Cth). 
D) The rules governing the employment of company managers.

Exam 19: Introduction to Companies and Incorporated Associations

In which of the following situations will a director be found to have breached their duty to exercise discretion?

A company differs from a sole trader and partnership in that it has a perpetual existence.

What is a prospectus?

Which of the following is a disadvantage of using a company as a business structure?

A director in breach of s 588G may be personally liable for the company's debts.

Which of the following is NOT an advantage of incorporation for members of an association?

An association of less than 20 people formed for trading purposes will be regulated by:

The advantage of putting a company into administration is that it:

Which of the following types of company are required to have the letters 'Ltd' after their name,either alone or with other letters?

In relation to the decision in Industrial Equity Ltd v Blackburn [1977] HCA 59 which of the following statements is NOT correct?

Limited liability is a key advantage of incorporation.

A large proprietary company is one that has:

Which of the following accurately describes 'replaceable rules'?

Legal Foundations

Legal Systems

How Law Is Made: Precedentstatute Law

Civil Liability: the Law of Torts and Negligence

Applications of Negligence to Business

Introduction to Contracts

Agreement Between the Parties

Intention to Create Legal Relations

Consideration

Capacity of the Parties

Genuine Consent

Is the Contract Legal

Terms of the Contract

Rights and Liabilities of the Parties,discharge and Remedies

Remedies in Contract

Statutory Consumer Guarantees and the Australian Consumer Law

General and Specific Consumer Protections Under the Acl

Agency

Partnerships

Choosing a Business Entity

Other Business-Related Torts

Insurance

Sale of Goodsbusiness to Business

Property and Mortgages

Intellectual Property

Ethics and Business Practice

Criminal Law in a Business Context

Competition Law

Insolvency and Debt Recovery

The Work Environment and the Employment Relationship

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