SUMMARY SOLICITORS ACCOUNTS BLP MCQS PRACTICE TEST

SUMMARY SOLICITORS ACCOUNTS BLP MCQS PRACTICE TEST Butterberry Limited is a company making yoghurts and other dairy products. It has been in existence for 12 years and has four shareholders who are also the four directors of the company. It has outgrown its existing premises and needs to move to a larger factory. Nick and Andi, two of the company's directors, negotiate the purchase of a new factory on the Wrexford Industrial Estate with Wrexford Development Corporation. Nick and Andi sign the contract and transfer document on behalf of Butterberry Limited. Whose name(s) will appear on the registered title of the property? A. Nick and Andi's B. All the directors' C. All the members' D. Butterberry Limited's - CORRECT ANSWER-D. Butterberry Limited's The company is a separate legal person capable of owning land. Charles Westron is the purchasing director of Westron Limited. He recently purchased some chemicals from Joe Sullivan, a sales manager for Chems Limited. The chemicals that have been delivered are the wrong concentration and unusable by Westron Limited. Chems Limited is refusing to replace them. If proceedings are commenced in respect of this dispute, who would be the parties to the action? Choose one or more of the following. A. Charles Westron B. Westron Limited C. Joe Sullivan D. Chems Limited - CORRECT ANSWER-B. Westron Limited D. Chems Limited The contract is made by Charles and Joe as agents for the two companies and so the companies would be the parties to any legal action. Nina is the sole shareholder and director of Tarvin Limited. She owns 100 £1 shares, all of which are fully paid. The company goes into insolvent liquidation. It has assets of £50,000 but owes creditors £250,000. How much will Nina be required to contribute to the company's funds? Which one of the following is CORRECT? A. Nothing B. £250,000 C. £100 D. £200,000 - CORRECT ANSWER-A. Nothing Shareholders are protected by limited liability and will only be liable to contribute the amount (if any) which is still unpaid on their shares. Nina has fully paid up shares and cannot be asked to contribute further funds. Tangent Limited operates from premises which it leases. The directors have not personally guaranteed Tangent Limited's obligations under the lease. Tangent Limited is late paying its rent and the landlord has threatened to sue its directors to recover the rent arrears. Is the following statement true or false? You can advise the directors that the landlord's threat is groundless. (a) True (b) False - CORRECT ANSWER-True The contractual relationship is between Tangent and the landlord, so the obligation to pay rent rests with the company, not with its directors. Which of the following business entities does NOT have separate legal personality? (a) Halcyon Holidays plc, a company listed on AIM. (b) Barry Jenkinson Ltd, a private limited company whose sole shareholder is Barry Jenkinson. (c) Acomb Foxwood Solicitors LLP, a firm of solicitors owned and run by Arvind Acomb and Frances Foxwood. (d) Hunca Munca Pets, an unincorporated business carried on by Lucinda Laws and Jane James with a view of profit. - CORRECT ANSWER-(d) Hunca Munca Pets, an unincorporated business carried on by Lucinda Laws and Jane James with a view of profit. Hunca Munca Pets is not a legal entity separate from its owners, Lucinda Laws and Jane James: it is a partnership between Lucinda and Jane within section 1 of the Partnership Act 1890. Each of the others - Halcyon Holidays plc, Barry Jenkinson Ltd and Acomb Foxwood Solicitors LLP - are recognised by the law as legal entities separate from their owners. Which ONE of the following CORRECTLY describes the principle of "piercing the veil of incorporation"? A. The recognition by the law of an entity as having a separate legal existence and therefore being an appropriate subject of legal rights and responsibilities. B. The recognition by the law that a person or number of persons forming a body corporate with separate legal personality are not liable for the debts and obligations of that body corporate, or are only liable to a specified extent. C. The disregarding of the separate personality of the company when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades, or whose enforcement he deliberately frustrates, by interposing a company under his control. D. The identification of property as owned beneficially by the owner of a company by virtue of the particular circumstances in which th - CORRECT ANSWER-C. - describes the principle of 'piercing the veil of incorporation' A - principle of separate legal personality B - describes the principle of limited liability D - describes the principle by which the 'veil of incorporation' was 'circumvented' by application of principles of equity, in the case case of Prest v Petrodel. But it did not require the separate legal personality of the company holding the title to the properties to be disregarded. David, one of the directors in Bourneport Limited, paid £20,000 for 4,000 £1 fully paid ordinary shares in Bourneport Limited. He also signed a personal guarantee, guaranteeing Bourneport's obligations under the terms of an overdraft agreement, in favour of Barclays Bank plc. Under the terms of the agreement, Bourneport Limited has an agreed overdraft limit of £150,000. The actual overdraft currently stands at £85,000. Which ONE of the following CORRECTLY describes David's potential future exposure in relation to the debts of Bourneport Limited? A. £85,000 B. £150,000 C. £170,000 D. £4,000 - CORRECT ANSWER-B. £150,000