Question 1

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally 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 her capital contribution. 
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 her capital contribution. 
D)  to the full extent.

Question 2

Kathy and John decide to form a partnership to sell fish food to local fish farms for the next five years. To be enforceable under the Statute of Frauds, the partnership agreement

Accepted Answer

A)  must be signed by a notary public. 
B)  must be in writing. 
C)  must be oral. 
D)  cannot involve a third party. 
A)  must be signed by a notary public. 
B)  must be in writing. 
C)  must be oral. 
D)  cannot involve a third party.

Question 3

A partnership ends if one partner dissociates from the firm.

Accepted Answer

A) True 
 B)False

Question 4

Edgar, Jon and Phoebe do business as Reliable Movers. Phoebe develops a debilitating illness and can no longer work. Phoebe

Accepted Answer

A)  may dissociate from the partnership. 
B)  may not dissociate from the partnership without Edgar and Jon's consent. 
C)  must pay damages to Edgar and Jon for the loss of her work. 
D)  may terminate the partnership. 
A)  may dissociate from the partnership. 
B)  may not dissociate from the partnership without Edgar and Jon's consent. 
C)  must pay damages to Edgar and Jon for the loss of her work. 
D)  may terminate the partnership.

Question 5

A partner always has the power and the right to dissociate from the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a lim?ited partner?ship. Connie dies. The partnership can

Accepted Answer

A)  continue only after a distribution of its assets. 
B)  continue only as a general partnership. 
C)  continue only if Drew and Ellen consent. 
D)  not continue because Connie's death dissolves the firm. 
A)  continue only after a distribution of its assets. 
B)  continue only as a general partnership. 
C)  continue only if Drew and Ellen consent. 
D)  not continue because Connie's death dissolves the firm.

Question 7

Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as

Accepted Answer

A)  a pass-through entity. 
B)  a natural person. 
C)  a tax-paying entity. 
D)  a partnership by estoppel. 
A)  a pass-through entity. 
B)  a natural person. 
C)  a tax-paying entity. 
D)  a partnership by estoppel.

Question 8

On a partner's dissociation, his or her duty of loyalty to the partnership ends.

Accepted Answer

A) True 
 B)False

Question 9

An oral agreement to form a partnership can never be enforced.

Accepted Answer

A) True 
 B)False

Question 10

For federal income tax purposes, a partnership is not a tax-paying entity.

Accepted Answer

A) True 
 B)False

Question 11

A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners.

Accepted Answer

A) True 
 B)False

Question 12

Each partner in a partnership has the right to full and complete information concerning the conduct of all aspects of partnership business.

Accepted Answer

A) True 
 B)False

Question 13

Rick and Sandy are limited partners in Total Profit Enterprises, a limited part?ner?ship. To avoid personal liability for partnership obligations, they must not

Accepted Answer

A)  acquire an interest in the firm. 
B)  contribute property to the firm. 
C)  engage in activities independent of the firm's business. 
D)  participate in the firm's management. 
A)  acquire an interest in the firm. 
B)  contribute property to the firm. 
C)  engage in activities independent of the firm's business. 
D)  participate in the firm's management.

Question 14

Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank allegedly on Doctors' behalf but without the authorization of the other partners. Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on the loan. Liability for its unpaid amount is imposed on

Accepted Answer

A)  Corbin and Doctors, jointly. 
B)  Corbin only. 
C)  Doctors only. 
D)  Evermore only. 
A)  Corbin and Doctors, jointly. 
B)  Corbin only. 
C)  Doctors only. 
D)  Evermore only.

Question 15

A third party cannot sue one of the partners of a partnership without suing all of the partners of the partnership.

Accepted Answer

A) True 
 B)False

Question 16

If a partnership's liabilities are greater than its assets, the partners bear the losses.

Accepted Answer

A) True 
 B)False

Question 17

International Exports, L.P., is a limited partnership, with $100,000 in de?clared but unpaid profits. International's creditors include Friendly Credit Corporation for $5,000 and Gwen, one of International's limited partners, also for $5,000. When Harry, one of International's general partners, de?cides to retire, the other general partners vote to liquidate and dissolve the firm. The limited partners, who are not asked their opinions, want Interna?tional to continue in business and file a suit against the general partners to compel this result. Can the court order International to continue? If not, what is the priority of the distribution of International's assets on its dissolution?

Accepted Answer

A court cannot order a partnership to co

Question 18

In a general partnership, all partners have equal rights in managing the partnership.

Accepted Answer

A) True 
 B)False

Question 19

Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.

Accepted Answer

A) True 
 B)False

Question 20

Any event that makes its unlawful for a partnership to continue its business will result in dissolution.

Accepted Answer

A) True 
 B)False

Exam 32: All Forms of Partnership

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts

Kathy and John decide to form a partnership to sell fish food to local fish farms for the next five years. To be enforceable under the Statute of Frauds, the partnership agreement

A partnership ends if one partner dissociates from the firm.

Edgar, Jon and Phoebe do business as Reliable Movers. Phoebe develops a debilitating illness and can no longer work. Phoebe

A partner always has the power and the right to dissociate from the partnership.

Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a lim?ited partner?ship. Connie dies. The partnership can

Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as

On a partner's dissociation, his or her duty of loyalty to the partnership ends.

An oral agreement to form a partnership can never be enforced.

For federal income tax purposes, a partnership is not a tax-paying entity.

A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners.

Each partner in a partnership has the right to full and complete information concerning the conduct of all aspects of partnership business.

Rick and Sandy are limited partners in Total Profit Enterprises, a limited part?ner?ship. To avoid personal liability for partnership obligations, they must not

A third party cannot sue one of the partners of a partnership without suing all of the partners of the partnership.

If a partnership's liabilities are greater than its assets, the partners bear the losses.

In a general partnership, all partners have equal rights in managing the partnership.

Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.

Any event that makes its unlawful for a partnership to continue its business will result in dissolution.

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