Question 1

Which of the following is true regarding notice of a partnership's dissolution?

Accepted Answer

A)  Notice of dissolution must be given through a newspaper in order to be legally acceptable. 
B)  Notice of dissolution is necessary when the partnership was dissolved by the operation of law. 
C)  Notice of dissolution is necessary when the partnership was dissolved by a judicial decree. 
D)  Notice of dissolution is not necessary when a dormant or a secret partner retires. 
A)  Notice of dissolution must be given through a newspaper in order to be legally acceptable. 
B)  Notice of dissolution is necessary when the partnership was dissolved by the operation of law. 
C)  Notice of dissolution is necessary when the partnership was dissolved by a judicial decree. 
D)  Notice of dissolution is not necessary when a dormant or a secret partner retires. D

Question 2

A partner may obtain a decree of dissolution when a court declares another partner insane or of unsound mind.

Accepted Answer

A) True 
 B)False  True

Question 3

Explain how a court dissolves a company on basis of futility.

Accepted Answer

All business partnerships are conducted for the purpose of making a profit. If this objective clearly cannot be achieved, the court may decree dissolution. One partner cannot compel the other members to assume continued losses after the success of the business becomes highly improbable, and further operation appears futile. However, a temporarily unprofitable operation does not justify dissolution. A court will issue a decree of dissolution only when the objective reasonably appears impossible to attain.

Question 4

Which of the following are justifiable reasons for a court to decree a partnership as dissolved?

Accepted Answer

A)  One partner receives profits from external interests. 
B)  One partner becomes incapable of performing his functions. 
C)  A firm is sued by a third-party for non-payment of dues. 
D)  A firm incurs losses in two successive years. 
A)  One partner receives profits from external interests. 
B)  One partner becomes incapable of performing his functions. 
C)  A firm is sued by a third-party for non-payment of dues. 
D)  A firm incurs losses in two successive years.

Question 5

Bankruptcy of a partnership does not terminate it.

Accepted Answer

A) True 
 B)False

Question 6

Partners who have incurred liabilities on behalf of a firm are entitled to reimbursement.

Accepted Answer

A) True 
 B)False

Question 7

A temporary inability of one partner to perform duties constitutes as incapacity.

Accepted Answer

A) True 
 B)False

Question 8

A partnership can be dissolved at anytime by the partners with mutual consent.

Accepted Answer

A) True 
 B)False

Question 9

When one partner is declared insane by a court:

Accepted Answer

A)  the firm ceases to exist. 
B)  the other partners must wind up the firm. 
C)  the partnership can be dissolved. 
D)  the business is declared futile. 
A)  the firm ceases to exist. 
B)  the other partners must wind up the firm. 
C)  the partnership can be dissolved. 
D)  the business is declared futile.

Question 10

When one partner dies, the other partners are entitled to:

Accepted Answer

A)  distribute the deceased partner's capital among themselves. 
B)  dissolve the partnership and add another partner. 
C)  enforce liability on the partner's spouse. 
D)  declare the partnership as futile. 
A)  distribute the deceased partner's capital among themselves. 
B)  dissolve the partnership and add another partner. 
C)  enforce liability on the partner's spouse. 
D)  declare the partnership as futile.

Question 11

Which of the following best describes a dissolution of a partnership?

Accepted Answer

A)  It is a change in relation of partners by elimination of one. 
B)  It is the re-distribution of capital among partners. 
C)  It is the taking care of outstanding obligations. 
D)  It is a change in relation of partners by addition of one. 
A)  It is a change in relation of partners by elimination of one. 
B)  It is the re-distribution of capital among partners. 
C)  It is the taking care of outstanding obligations. 
D)  It is a change in relation of partners by addition of one.

Question 12

A representative of a deceased partner may act as a temporary partner.

Accepted Answer

A) True 
 B)False

Question 13

In a partnership for a definite term, any partner has the right to withdraw at any time.

Accepted Answer

A) True 
 B)False

Question 14

Brothers Inc., a partnership firm, consisted of three partners Jim, Mark, and Jake. However, Jim was declared bankrupt by the court and the company suffered considerable losses during the same time. Which of the following is likely to be true in this scenario?

Accepted Answer

A)  Jake and Mark can declare the firm to be bankrupt. 
B)  Jim is automatically exempt from liabilities. 
C)  Jake and Mark can enforce the liability on Jim. 
D)  Jim can continue to be a partner in the firm. 
A)  Jake and Mark can declare the firm to be bankrupt. 
B)  Jim is automatically exempt from liabilities. 
C)  Jake and Mark can enforce the liability on Jim. 
D)  Jim can continue to be a partner in the firm.

Question 15

Notice of dissolution of a partnership is not necessary to third persons who have done business with the firm.

Accepted Answer

A) True 
 B)False

Question 16

Once a partnership is dissolved, assets are distributed:

Accepted Answer

A)  according to partnership deed. 
B)  according to the capital contribution. 
C)  according to liabilities incurred. 
D)  according to the profit contributions of each partner. 
A)  according to partnership deed. 
B)  according to the capital contribution. 
C)  according to liabilities incurred. 
D)  according to the profit contributions of each partner.

Question 17

Dissolution of partnership relieves the partners of their duties to each other.

Accepted Answer

A) True 
 B)False

Question 18

The withdrawal of one partner at any time does not dissolve the partnership.

Accepted Answer

A) True 
 B)False

Question 19

A withdrawing partner is entitled to:

Accepted Answer

A)  receive exemption from liability for company losses. 
B)  be exempt from personal taxes. 
C)  receive undistributed profits. 
D)  be exempt from outstanding debts. 
A)  receive exemption from liability for company losses. 
B)  be exempt from personal taxes. 
C)  receive undistributed profits. 
D)  be exempt from outstanding debts.

Question 20

One partner can compel the other members to assume continued losses after the success of the business becomes highly improbable.

Accepted Answer

A) True 
 B)False

Exam 33: Dissolution of a Partnership

Which of the following is true regarding notice of a partnership's dissolution?

A partner may obtain a decree of dissolution when a court declares another partner insane or of unsound mind.

Explain how a court dissolves a company on basis of futility.

Which of the following are justifiable reasons for a court to decree a partnership as dissolved?

Bankruptcy of a partnership does not terminate it.

Partners who have incurred liabilities on behalf of a firm are entitled to reimbursement.

A temporary inability of one partner to perform duties constitutes as incapacity.

A partnership can be dissolved at anytime by the partners with mutual consent.

When one partner is declared insane by a court:

When one partner dies, the other partners are entitled to:

Which of the following best describes a dissolution of a partnership?

A representative of a deceased partner may act as a temporary partner.

In a partnership for a definite term, any partner has the right to withdraw at any time.

Brothers Inc., a partnership firm, consisted of three partners Jim, Mark, and Jake. However, Jim was declared bankrupt by the court and the company suffered considerable losses during the same time. Which of the following is likely to be true in this scenario?

Notice of dissolution of a partnership is not necessary to third persons who have done business with the firm.

Once a partnership is dissolved, assets are distributed:

Dissolution of partnership relieves the partners of their duties to each other.

The withdrawal of one partner at any time does not dissolve the partnership.

A withdrawing partner is entitled to:

One partner can compel the other members to assume continued losses after the success of the business becomes highly improbable.

Introduction to Law

Courts and Court Procedure

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Con

Warranties, Product Liability, and Cons

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties and Holders in Due Course

Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Labor Legislation

Introduction to Business Organization

Creation and Operation of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corpora

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills, Inheritances, and Trusts

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