700005 week 3 module 2.docx - 700005 AIM Tutorial Week 3...

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700005 AIM Tutorial Week 3 Module 2 (Business Structures) Student Version Tutor demonstration questions 3.9, 3.11 3.9 Another relatively widespread business structure is a trust. What are the two main forms of trusts in Australia? What are the tax issues associated with family trusts? 3.11 What does the term ‘mutual agency’ refer to in the context of partnerships? Provide an example where 'mutual agency' could be both an advantage and disadvantage for a partnership. Students please note that the individual work in this tutorial exercise is marked as part of the portfolio assessment. You cannot receive marks for this component if you are not present in class. You are marked for effort and completion as per rubric and not simply for attendance. This is assessment 1 of 9. Each assessment is worth 5 marks giving a total of 45 for nine exercises. The total mark will be converted into 20% weighting at the end of term.
STUDENT INDIVIDUAL WORK This is the first assessed tutorial exercise out of nine for the entire term and is worth 5 marks. 3.8 Illustrate with an example the difference in the format of the equity section of the balance sheet between a sole trader, partnership and company. 3.15 What do the following terms mean? a. Unlimited liability b. Mutual agency c. Dividend d. Preference shares e. Unit trust a. Unlimited liability Unlimited liability is when the individual or partnership is fully liable for all the debts of the entity. b. Mutual agency Mutual agency is when a partner in a partnership is seen as being an agent for the business, having the right to enter into contracts for the business and being bound by any partnership contract. c. Dividend A dividend is the distribution of part of a company’s profit to shareholders. It is usually expressed as a number of cents per share. d. Preference shares Preference Shares rank ahead of ordinary shares if the company goes into liquidation. Preference shares also usually have a fixed rate of dividend, which is paid out before the ordinary shareholders’ dividend is paid. e. Unit trust A unit trust is a type of trust that holds a collection of assets on behalf of various parties rather than family members. Income is distributed to the parties according to their respective unit holdings in the trust. Unit trusts usually concentrate on a particular investment such as equity, property or cash management.

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