Choose the correct answer for each question.

1. Which of the following statements about employment administration is not true?

   1.   ?    A business which employs people must administer a Pay as You Earn (PAYE) system
   2.   ?    Detailed payroll records are subject to inspection by the Inland Revenue
   3.   ?    Employing people involves keeping additional VAT records
   4.   ?    A business which employs people must administer National Insurance Contributions (NIC) on behalf of the employee
      

2. Which statement best describes the business entity concept?

   1.   ?    The business entity concept requires people starting up in business to decide between the sole trader, partnership and company forms of business organisation
   2.   ?    The business entity concept describes the separation which is necessary between the financial affairs of a business and the financial affairs of its proprietor(s)
   3.   ?    The business entity concept describes the relationship between the business and its bank
   4.   ?    The business entity concept means that partners are responsible for each others' actions

3. Which of the following descriptions accurately describes drawings?

   1.   ?    Drawings are part of the initial business plan presented to a potential lender in support of a loan application
   2.   ?    Drawings are regular interest payments made to the providers of finance
   3.   ?    Drawings are money, or sometimes goods, taken out of the business by its proprietor(s)
   4.   ?    Drawings are amounts of cash which a proprietor takes out of his/her personal bank account to put into the business

4. Which of the following statements about company directors is not true?

   1.   ?    Dividends cannot, by law, be paid to directors even if they are also shareholders in the company
   2.   ?    Directors do not take drawings from the company which employs them
   3.   ?    Company directors who are also shareholders in the company may receive cash in the form of both salary and dividends
   4.   ?    Directors are employees of the company
      

5. Which of the following businesses is least likely to be easily saleable when its proprietors wish to retire?

   1.   ?    An interior design business run by a husband and wife partnership. There are no employees.
   2.   ?    A business which owns the premises, plant and machinery to produce haircare products
   3.   ?    A well-established retail business, which owns its own shop premises, selling household goods
   4.   ?    A graphic design partnership with seven partners and forty staff