After Bill Roles Graduated from University, He Incorporated Roles Enterprises

question 103

Multiple Choice

After Bill Roles graduated from university, he incorporated Roles Enterprises Ltd. He put $10,000 into the corporation by way of a shareholder's loan and the corporation granted him a security interest in one of its two delivery trucks. You knew Bill at school, so when Roles Enterprises Ltd. needed computer supplies, Bill, on behalf of the corporation, contracted with you, the owner of a business selling computer supplies. As it turned out, Bill placed such orders with you almost every three weeks. Read each of the following separately and indicate which of the following is true.

• A) If Bill neglects to file annual returns for the corporation, Roles Enterprises Ltd. could cease to exist.
• B) If an employee of Roles Enterprises Ltd. came to your store to pick up supplies and caused $900 damage by his negligent driving, you could sue the employee, Roles Enterprises Ltd., and Bill personally because the employee worked for Bill's corporation.
• C) If Roles Enterprises Ltd. owed you $1500 for supplies when it was placed into bankruptcy by its creditors, Bill would be more likely to lose money he lent to the corporation than you would be.
• D) If the corporation owed you money and Bill, the only shareholder in the corporation, was killed, you would look to Bill's estate for payment.
• E) If Bill had inadvertently contracted with you before the corporation was in existence, the corporation would lose the ability to ratify that contract, and the contract would be considered void.

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Definitions:

Average Variable Costs

The total variable costs (e.g., labor, materials) divided by the quantity of output produced, showing the variable cost per unit of output.

Workers

Individuals engaged in physical or mental labor to produce goods or provide services in exchange for wages.

Units

Basic quantities of measurement or items in inventory or production.

Average Cost

The total cost of production divided by the number of units produced, representing the cost per unit.