(1) Talal is forming a business which he wants to control completely. He knows nobody else with whom he wishes to work, he values his privacy, and he dislikes formality, paper work, state filing requirements, and lawyers. What type of business organization should he prefer?
(a) general partnership (b) Sole Proprietorship
(c) Single Member Company (d) None of these
(2) The Articles of Association of a company contain:
(a) a set of governing rules adopting by the company
(b) resolutions of the board of directors
(c) information about the corporation, including its organization and functions.
(d) None of these
(3) A partnership involves three essential elements. Which of the following is not one of those elements?
(a) An equal right in the management of the business
(b) Limited liability for the liabilities of the firm
(c) A joint ownership of the business
(d) None of these
(4) Rashid, Shahid and Talal agree to form a computer business. Rashid agrees to manage the business and to assume full personal liability. Shahid and Talal agree to invest in the firm but to be liable only to that extent. These three have formed
(a) a limited liability company (b) a limited liability partnership
(c) an unlimited partnership (d) None of these
(5) The members of a limited partnership include:
(a) general and limited partners (b) general partners only
(c) creditors (d) None of these
(6) A bearer cheque may be negotiated by:
(a) Mere delivery (b) Endorsement and delivery
(c) Delivery with a separate written contract
(d) None of these
(7) The responsibility of overall management of a company belongs to:
(a) the chief financial officer (b) the employees
(c) the board of directors (d) None of these
(8) The best definition of a quorum is which of the following?
(a) It is 51% of all shareholders
(b) It is the number of members of a company that must be present before business may be transacted.
(c) It is the number of voters who must agree to alter the company’s articles.
(d) None of these
(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?
(a) Individual assets of the partners
(b) Personal property of the limited partners
(c) Partnership assets (d) None of these
(10) The board of directors does not have responsibility over which of the following areas?
(a) The appointment, supervision, and removal of corporate officers
(b) The appointment, supervision, and removal of employees generally
(c) The declaration and payment of corporate dividends
(d) None of these
(11) A found a wallet full of money on a roadside and upon finding the address of the owner in the wallet he returned it to its owner. When he came back he read the announcement of a reward for the return of such wallet in the newspaper:
(a) The owner is liable to pay him the reward
(b) The owner is not liable to pay him the reward
(c) The owner is liable to pay him half of the reward
(d) None of these
(12) Muhsin in considering forms of business organisation for his law firm. One advantage of the limited liability partnership form is that it allow the limited partners to avoid personal liability for:
(a) the malpractice of other limited partners regarding the conduct of the firm’s business
(b) the obligation of the firm beyond their contributions to the capital
(c) the obligations of the firm within the limit their contributions to be capital
(d) None of these
(13) A’s son has forged B’s name to a pronote. B under threat of prosecuting A’s son demanded that A should sell him his house that is worth Rs. 1000,000/- for Rs. 300,000/- A agrees with the proposal. The contract is
(a) Valid (b) Voidable
(c) Void (d) None of these
(14) The best, simple definition of a contract is:
(a) an objective “meeting of the minds”
(b) a legally enforceable agreement
(c) a document reflecting a “meeting of the mind” between two or more competent parties
(d) None of these
(15) Salman signs a written contract with Khalid giving him the right to cast his votes in the election for the directors of Hashiya Limited, whose
shares Salman holds. This agreement between Slaman and Khalid is known as:
(a) a derivative (b) a proxy
(c) a Memorandum of Understanding
(d) None of these
(16) A sent a proposal to B by post for the sale of his house. B accepted the offer by post. A may revoke his proposal at any time before
(a) B receives the letter of proposal
(b) B posts the letter of acceptance
(c) A receives the letter of acceptance
(d) None of these
(17) Danish offers to sell to Sadiq a mobile phone for Rs. 550. Sadiq tells Danish that he will take the phone for Rs. 540. Nothing further is said and the next day, Danish demands Rs. 450 from Sadiq in exchange for the phone. Choose the correct statement
(a) Sadiq is bound to pay as his offer has been accepted by Danish;
(b) Although there is no contract Sadiq;
(c) Sadiq is not bound to pay as there is no contract;
(d) None of these
(18) If you want to start a partnership what formal requirements do you have to meet?
(a) You must register the firm with the Registrar of Firms;
(b) You do not need to satisfy any formal requirements;
(c) Your firm cannot operate until you draft and get registered the Article of Partnership;
(d) None of these
(19) The relation between the partners of a firm is of:
(a) Employer and Employee (b) Trustee and Beneficiary
(c) Principal and Agent (d) None of these
(20) A bearer instrument may be negotiated by:
(a) Mere delivery
(b) Endorsement and delivery
(c) Delivery with a separate written contract
(d) None of these


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