Chapter: Business Structure

How can we solve the following MCQ?

QUESTION 1 1 points Save Answer Christine and Danielle form a partnership to run their scrapbooking business. They agree to share the prots and losses of the partnership equally. The partnership agreement allows for a salary to be paid to either or both partners if they both agree. As Christine manages the shop, they agree that she will be paid a salary of $20,000. The CIY partnership accounting net prot after paying Christine's salary is $50,000. According to the partnership agreement, what is the amount of the partnership distribution attributable to Christine? 0, $45,000 0, $15,000 O $25,000 CI $35,000 QUESTION 2 1 points Save Answer Which of the following statements in relation to a sole trader is FALSE? The income earned by a sole trader 're taxed wholly in the individual's hands. 1) O Sole traders have unllmited liability. Q A sole trader declares their business prot or loss in their personal income tax return. O A sole trader must lodge both an individual and a business tax return. QUESTION 3 1 points Save Answer Peter and Paul form a partnership to run their lawnmowing business. They agree to share the prots and losses of the partnership equally. The partnership agreement allows for a salary to be paid to either or both partners if they both agree. As Peter works five days a week and Paul works three days a week, the):I agree to the following salaries being paid: Peter \"0,00 Paul $24,000 The partnership accounting prot after salaries had been paid was $30,000. According to the partnership agreement, what is the amount of the partnership distribution attributable to Paul? IAI $39,000 IAI $47,000 IA,I $50,400 IAI $53,000 QUESTION 4 1 points Save Answer The Basil family trust is a discretionary trust with the following beneficiaries: Age Employment Derek 53 Full-time Judy 52 Not working Martin 18 Full-time carpenter Felicity 16 Full-time school The trust had income of $21,000 to distribute. The trustee used Martin's distribution to directly pay for the tools he required to start out in carpentry. Which of the following statements in relation to the Basil family trust members is CORRECT? O Felicity's income from the family trust will be taxed at normal adult marginal tax rates O Martin's income from the family trust will not be taxable in his hands as he has not directly received it O The trustee can choose to distribute most of the trust income to Judy O The trustee cannot choose to distribute most of the income to DerekQUESTION 5 1 points Save Answer Johnsean Pty Ltd receives franked dividends as a result of its investment in BHP. Which of the following statements in relation to dividends received by Johnsean is CORRECT? The BHP dividends received by Mitchapon are treated (and taxed) as dividends in the hands of Mitchapon shareholders. The amount of the dividend that Mitchapon includes in assessable income is the amount of the dividend less any imputation credits. O Mitchapon is not required to gross up the BHP dividends in its assessable income as it is a corporate shareholder. O O The franking credits attached to the BHP dividends can be passed on to Mitchapon shareholders.QUESTION 6 1 points Save Answer Which one of the following is an advantage of a discretionary trust over a private company? O Ability of the trustee to vary distribution ratios from year to year O Limited liability O High income earners pay less tax on distributions from a trust than from a company O All of the above are relative benefits of a discretionary trust structure as compared to a private company QUESTION 7 1 points Save Answer What is the main characteristic that differentiates companies from partnerships? Companies can invest (purchase shares) in other companies. O Companies are separate legal entities from their owners. O Companies can obtain tax deductions for salaries of non-related employees. O Companies can operate in offshore markets