QUESTION 1

Lyndsay and Bryan have been running a delicatessen from a market stall for the last nine months.They contributed unequal amounts to finance the business and agreed at the outset that all decisions relating to the delicatessen required unanimous consent.This was the only aspect of running the business that they expressly agreed.

Which ONE of the following is CORRECT?

AProfits and losses will be shared equally.

BTo bring the partnership to an end at least three months' notice must be given.

CIf Bryan and Lyndsay agree to introduce a new partner, the new partner will automatically become jointly liable for the existing and future debts of the partnership.

DIf Bryan gives notice of his intention to retire, the business will continue as a partnership.

QUESTION 2

Molly, Sam and Alex were in partnership together as conference caterers.On 30 May 2020 the firm entered into a contract to provide catering for a customer, Xen Limited.On 11 June 2020 Alex retired from the partnership.Molly and Sam agreed to indemnify Alex against liability on the contract. On 23 July 2020 the firm defaulted on the contract.Linda joined the firm as a partner on 6 August 2020. Other than the agreement to indemnify, no other agreements have been entered into which would affect your answer.

Which ONE of the following options is CORRECT in relation to liability to Xen Limited under the catering contract?

AMolly, Sam and Linda are liable.

BMolly, Sam, Linda, and Alex are liable.

CMolly, Sam and Alex are liable.

DMolly and Sam are liable.

QUESTION 3

The board of directors of Champion Stars Limited ('Champion') is proposing to purchase office equipment worth 2,000 ('the Proposal') from Bill Tanner, the husband of Susan, the Finance Director.The board has previously had problems with its understanding of company law procedure.Champion has the Model Articles of Association for private companies with no amendments.

Assuming that Susan attends the board meeting when the Proposal will be voted upon, which ONE of the following statements is CORRECT?

ASusan is entitled to vote and count in the quorum and must make a declaration of interest under s177 Companies Act 2006.

BSusan is not entitled to vote and count in the quorum but she must make a declaration of interest under s177 Companies Act 2006.

CSusan is entitled to vote but does not need to make a declaration of interest under s177 Companies Act 2006.

DSusan is not entitled to vote and may not need to make a declaration of interest under s177 Companies Act 2006.

QUESTION 4

The following illustrates the directors and shareholders of Stillten Limited ('SL'), which has adopted the Model Articles of Association for private companies with no amendments.

Stanley Brand (also chairperson) - 24% shareholding

Patricia Williams - 12.5% shareholding

Loraine Bexley - 12.5% shareholding

Philippa Bryce - 51% shareholding

To survive the current market SL needs to expand, but to do so it will require a 56,000 loan.The directors all attend a board meeting at which they will decide whether or not to take out the loan.

Which ONE of the following is CORRECT?

AThe resolution will pass if Stanley and Patricia vote in favour and Loraine and Phillipa vote against.

BThe resolution will fail if Patricia and Loraine vote against and Stanley and Phillipa vote in favour.

CThe resolution will pass if Phillipa votes in favour and Stanley, Patricia and Loraine vote against.

DThe resolution will pass if Stanley votes in favour, Patricia and Loraine vote against and Phillipa abstains.

QUESTION 5

The accounts set out below show a Balance Sheet for J. Kleptome, Accountant.

Balance Sheet for

J. Kleptome, Accountant

Employment of Capital

Fixed Assets

Office Equipment35,000

Cars35,000

70,000

Current Assets

Closing Work in Progress55,000

Debtors20,000

Cash at Bank2,000

Prepayment5,000

82,000

Current Liabilities

Creditors10,000

Accrual2,000

(12,000)

Net Current Assets70,000

Less

Long Term Liabilities

Bank Loan(70,000)

Net Assets70,000

Capital Employed

Capital70,000

Which ONE of the following correctly demonstrates that the Balance Sheet balances?

AThe fact that Net Assets equals Capital.

BThe fact that Fixed Assets equals Net Current Assets.

CThe fact that Net Current Assets equals Long Term Liabilities.

DThe fact that Long Term Liabilities equals Capital.