Question 1

Gwen and Hugo do business as Gwen & Hugo Civil Engineers, a partnership. This firm is governed by the Uniform Partnership Act

Accepted Answer

A)  in the absence of an express agreement. 
B)  in the absence of an implied agreement. 
C)  only under an express agreement. 
D)  under all circumstances. 
A)  in the absence of an express agreement. 
B)  in the absence of an implied agreement. 
C)  only under an express agreement. 
D)  under all circumstances. A

Question 2

Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her

Accepted Answer

A)  effect on the business. 
B)  effort. 
C)  capital contribution. 
D)  none of the choices. 
A)  effect on the business. 
B)  effort. 
C)  capital contribution. 
D)  none of the choices. D

Question 3

Cathy, Don, and Ethel are partners in Fruit Orchard Farms. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

Accepted Answer

A)  dissociation. 
B)  dissolution. 
C)  unethical. 
D)  illegal. 
A)  dissociation. 
B)  dissolution. 
C)  unethical. 
D)  illegal. A

Question 4

Vern is one of three partners in Waffles Food Truck. Concerning all aspects of the partnership business, Vern is entitled to information

Accepted Answer

A)  on a complete basis. 
B)  only on an "as needed" basis. 
C)  only for a reasonable purpose. 
D)  only related to the partner's capital contribution. 
A)  on a complete basis. 
B)  only on an "as needed" basis. 
C)  only for a reasonable purpose. 
D)  only related to the partner's capital contribution.

Question 5

Cornell and Duke are partners in Equity Lending. They decide to admit Fran to the firm as a new partner. Fran's liability for partnership debts incurred before her admission is

Accepted Answer

A)  limited to her capital contribution to the firm. 
B)  limited to her personal assets. 
C)  nothing. 
D)  unlimited. 
A)  limited to her capital contribution to the firm. 
B)  limited to her personal assets. 
C)  nothing. 
D)  unlimited.

Question 6

Quint and Reba are partners in Sofas Plus, a furniture store. Quint dissociates from the business. This ends Quint's

Accepted Answer

A)  right to participate in the partnership business. 
B)  right to have his interest in the partnership purchased by the firm. 
C)  duty of care with respect to events that occurred before dissociation. 
D)  all of the choices. 
A)  right to participate in the partnership business. 
B)  right to have his interest in the partnership purchased by the firm. 
C)  duty of care with respect to events that occurred before dissociation. 
D)  all of the choices.

Question 7

A partner can put his or her self-interest before the interest of the partnership without violating any fiduciary duty owed to the firm.

Accepted Answer

A) True 
 B)False

Question 8

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

Accepted Answer

A)  the automatic termination of the firm's legal existence. 
B)  the partnership's buyout of Brad's interest in the firm. 
C)  the immediate maturity of all partnership debts. 
D)  the temporary suspension of the partnership's business. 
A)  the automatic termination of the firm's legal existence. 
B)  the partnership's buyout of Brad's interest in the firm. 
C)  the immediate maturity of all partnership debts. 
D)  the temporary suspension of the partnership's business.

Question 9

Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Dain is liable for the debts

Accepted Answer

A)  in proportion to the number of partners in the firm. 
B)  to no extent. 
C)  to the extent of his capital contribution to the firm. 
D)  to the full extent. 
A)  in proportion to the number of partners in the firm. 
B)  to no extent. 
C)  to the extent of his capital contribution to the firm. 
D)  to the full extent.

Question 10

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

Accepted Answer

A)  Jana and Milo. 
B)  Jana. 
C)  Milo. 
D)  Jana and Kwan. 
A)  Jana and Milo. 
B)  Jana. 
C)  Milo. 
D)  Jana and Kwan.

Question 11

A court can order the dissolution of a partnership if the business can only be operated at a loss.

Accepted Answer

A) True 
 B)False

Question 12

A partner is liable for simple negligence in judgment in conducting partnership business because such an act implies intent to engage in misconduct.

Accepted Answer

A) True 
 B)False

Question 13

Among three partners, unless they agree otherwise, unanimous consent is required to manage the business of the partnership.

Accepted Answer

A) True 
 B)False

Question 14

In most states, in a dispute on a partnership matter, a third party cannot sue an individual partner but must file an action against the entire firm.

Accepted Answer

A) True 
 B)False

Question 15

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

Accepted Answer

A)  can continue its business for one twelve-month period. 
B)  can continue its business indefinitely. 
C)  dissolves immediately unless the partners change its business. 
D)  is immediately subject to criminal prosecution and penalties. 
A)  can continue its business for one twelve-month period. 
B)  can continue its business indefinitely. 
C)  dissolves immediately unless the partners change its business. 
D)  is immediately subject to criminal prosecution and penalties.

Question 16

When a person who is not a partner holds himself or herself out as a partner, a court may impose liability-and partnership rights-on the alleged partner.

Accepted Answer

A) True 
 B)False

Question 17

The essential elements of a partnership do not include

Accepted Answer

A)  a sharing of profits and losses. 
B)  a joint ownership of the business. 
C)  an equal right in the management of the business. 
D)  good faith. 
A)  a sharing of profits and losses. 
B)  a joint ownership of the business. 
C)  an equal right in the management of the business. 
D)  good faith.

Question 18

Dean, a partner in Equipment Sales, applies for a loan with Farmers Bank allegedly on Equipment's behalf but without the authorization of the other partners. The bank knows that Dean is not authorized to take out the loan. Liability in the event of default will be imposed on

Accepted Answer

A)  none of the choices. 
B)  Dean. 
C)  Equipment. 
D)  Farmers Bank. 
A)  none of the choices. 
B)  Dean. 
C)  Equipment. 
D)  Farmers Bank.

Question 19

A partnership agreement must apportion profits and losses in the same ratio as the partners' investment of time and capital in the business.

Accepted Answer

A) True 
 B)False

Question 20

The payment of a percentage of profits from the ownership of property to repay a loan does not prove the existence of a partnership.

Accepted Answer

A) True 
 B)False

Exam 31: All Forms of Partnership

Gwen and Hugo do business as Gwen & Hugo Civil Engineers, a partnership. This firm is governed by the Uniform Partnership Act

Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her

Cathy, Don, and Ethel are partners in Fruit Orchard Farms. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

Vern is one of three partners in Waffles Food Truck. Concerning all aspects of the partnership business, Vern is entitled to information

Cornell and Duke are partners in Equity Lending. They decide to admit Fran to the firm as a new partner. Fran's liability for partnership debts incurred before her admission is

Quint and Reba are partners in Sofas Plus, a furniture store. Quint dissociates from the business. This ends Quint's

A partner can put his or her self-interest before the interest of the partnership without violating any fiduciary duty owed to the firm.

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Dain is liable for the debts

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

A court can order the dissolution of a partnership if the business can only be operated at a loss.

A partner is liable for simple negligence in judgment in conducting partnership business because such an act implies intent to engage in misconduct.

Among three partners, unless they agree otherwise, unanimous consent is required to manage the business of the partnership.

In most states, in a dispute on a partnership matter, a third party cannot sue an individual partner but must file an action against the entire firm.

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

When a person who is not a partner holds himself or herself out as a partner, a court may impose liability-and partnership rights-on the alleged partner.

The essential elements of a partnership do not include

Dean, a partner in Equipment Sales, applies for a loan with Farmers Bank allegedly on Equipment's behalf but without the authorization of the other partners. The bank knows that Dean is not authorized to take out the loan. Liability in the event of default will be imposed on

A partnership agreement must apportion profits and losses in the same ratio as the partners' investment of time and capital in the business.

The payment of a percentage of profits from the ownership of property to repay a loan does not prove the existence of a partnership.

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