TRUE FALSE 10. Dudley and Woodhaven open a spiked-lemonade stand outside Tiger S
ID: 2413296 • Letter: T
Question
TRUE FALSE 10. Dudley and Woodhaven open a spiked-lemonade stand outside Tiger Stadium during the World Series. This enterprise is a joint venture. TRUE FALSE 11. Zachary, a CPA, invests in Luella's Limited Partnership in exchange for guaranteed distributions of profits. He is not to participate in the management of the business However, if Luella asks for assistance in managing accounts, Zachary may still help without losing his limited liability. TRUE FALSE 12. Dumbledore invests in Voldemort's Wizardry Shop and agrees to let Voldemort manage the entire operation, Dumbledore will be a silent investor in exchange for a share of the profits. When Voldemort's business goes broke and he liquidates all the assets, Dumbledore is treated as a creditor with regard to the distribution of the cash.Explanation / Answer
Answer of the question 10:
A joint venture is an association of two or more individuals or entities for the purpose of engaging in a specific business enterprise for profit. A joint venture agreement clearly states about the financial contributions made by each party and also about the distribution of profits, losses and liabilities.and how the disputes will be resolved.
Some of the major characteristics of joint venture are shared ownership,shared returns and risks and shared governance.
In the question, it is just mentioned that Dudley and Woodhaven have opened a spiked lemonade outside the stadium and no information is mentioned about the risk sharing pattern and ownership.So, it cannot be considered a joint venture and therefore the statement is false.
Answer of question 11:
A limited liabilitry partnership is a partnership in which some or all partners have limited liabilities. The major difference between this type of partnership and traditional partnership is that here, each partner is not responsible for another partner's conduct or negligence.
Here, it is explicitlly mentioned that the Certified Public Accountant,Zachary is investing in the shares in exchange for guaranteed distribution of profits but he will not participate in the management of the company and it is asked whether he can participate in handling the accounts of the company . As, handling accounts come under the tasks of managerial personnel of the company, such as creating business strategies to create shareholder's value which have a financial impact on the performance of the company which is not permitted to him.
The statement is false.
Answer to Question No 12:
The question states that Dumbledore although investing in the company but remains as a silent investor and do not participate in the major operations of the company but getting in exchange a share in the profits of a company.
The above question is a comprehensive case of dissolution. At the time of liquidation of the company , when all assets and liabilities are settled, the creditor becomes due for the balance payment of cash, therefore,we can say that Dumbledore will be shown as a creditor the amount of cash payable.Dumbledore becomes an investor in the company and has the stake to participate in the major affairs of the company.According to legal and regulatory requirements, the company,may,at his option, choose not to participate in the management of the company but getting the required share of profits as done in the case of Voldemort"s Wizardry shop.
The statement is true.
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