Question 1

If a partner fails to contribute the amount equal to her negative capital account balance, then it can be recovered:

Accepted Answer

A)  from that partner's assets. 
B)  by obtaining an undertaking from that partner. 
C)  from the other partners. 
D)  by charging the creditor's account. 
A)  from that partner's assets. 
B)  by obtaining an undertaking from that partner. 
C)  from the other partners. 
D)  by charging the creditor's account.

Question 2

Leonard, Ted, and Julius are partners at Jutle Associates. They signed a two year lease agreement with Property Company for business purposes. Five months into the new agreement, Leonard dissociates from the partnership. Under what circumstances will Leonard no longer be liable on the lease agreement?

Accepted Answer

A)  Leonard gives proper notice to Property Company of his intent to dissociate from Jutle. 
B)  The three partners and Property Company enter into an appropriate novation agreement. 
C)  Leonard filed a Statement of Dissociation more than 90 days prior to leaving the partnership. 
D)  Property Company will not serve to relieve Leonard of liability under the lease agreement. 
A)  Leonard gives proper notice to Property Company of his intent to dissociate from Jutle. 
B)  The three partners and Property Company enter into an appropriate novation agreement. 
C)  Leonard filed a Statement of Dissociation more than 90 days prior to leaving the partnership. 
D)  Property Company will not serve to relieve Leonard of liability under the lease agreement.

Question 3

Which of the following causes a dissociation of a partnership?

Accepted Answer

A)  Withdrawal of a partner from a partnership at will 
B)  Three partners disagreeing on a matter in the ordinary course of business 
C)  A partner being provided his partnership interest 
D)  Addition of a partner to the partnership 
A)  Withdrawal of a partner from a partnership at will 
B)  Three partners disagreeing on a matter in the ordinary course of business 
C)  A partner being provided his partnership interest 
D)  Addition of a partner to the partnership

Question 4

Amos, Beverly, Carlos, and Dan were partners in a partnership in which the agreement states that the partnership will continue until 2010. Amos died in 2006. What vote of the remaining partners is necessary to continue operating the partnership business?

Accepted Answer

A)  A simple majority vote 
B)  A two-thirds majority vote 
C)  A three-quarters majority vote 
D)  A unanimous vote 
A)  A simple majority vote 
B)  A two-thirds majority vote 
C)  A three-quarters majority vote 
D)  A unanimous vote

Question 5

Which of the following is true about the effect of LLP statutes after appointment of a new partner?

Accepted Answer

A)  RUPA provides that the new partner has full liability for the LLP's obligations. 
B)  The former partners will be personally responsible on committing a malpractice. 
C)  For obligations incurred before his admission, the new partner may not be held liable. 
D)  LLP partnership agreements often change the RUPA rule about a new partner's liability. 
A)  RUPA provides that the new partner has full liability for the LLP's obligations. 
B)  The former partners will be personally responsible on committing a malpractice. 
C)  For obligations incurred before his admission, the new partner may not be held liable. 
D)  LLP partnership agreements often change the RUPA rule about a new partner's liability.

Question 6

Termination occurs after all partnership assets have been distributed.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following causes dissociation?

Accepted Answer

A)  A partner's transfer of his transferable partnership interest 
B)  A creditor's obtaining a charging order 
C)  A partner's wrongful conduct materially affecting the partnership business 
D)  The addition of a new partner to a partnership 
A)  A partner's transfer of his transferable partnership interest 
B)  A creditor's obtaining a charging order 
C)  A partner's wrongful conduct materially affecting the partnership business 
D)  The addition of a new partner to a partnership

Question 8

Which of the following is true about eliminating partners' apparent authority?

Accepted Answer

A)  Eliminating the apparent authority is not a safe practice during winding up. 
B)  Apparent authority cannot be eliminated by merely informing the existing business clients. 
C)  Filing a Statement of Dissolution will increase the partners' apparent authority. 
D)  The partnership should post notice of the dissolution at its place of business to let third parties know. 
A)  Eliminating the apparent authority is not a safe practice during winding up. 
B)  Apparent authority cannot be eliminated by merely informing the existing business clients. 
C)  Filing a Statement of Dissolution will increase the partners' apparent authority. 
D)  The partnership should post notice of the dissolution at its place of business to let third parties know.

Question 9

Poxabogue Associates, a partnership, is dissociated by the retirement of a partner. The business is continued by the remaining partners and a new partner, Enrica. What is Enrica's liability to creditors for partnership obligations that arose before she became a partner?

Accepted Answer

A)  Enrica is liable to the extent of partnership assets. 
B)  Enrica is liable only if she agrees to assume the retired partner's liability. 
C)  Enrica is fully liable. 
D)  Enrica has no liability. 
A)  Enrica is liable to the extent of partnership assets. 
B)  Enrica is liable only if she agrees to assume the retired partner's liability. 
C)  Enrica is fully liable. 
D)  Enrica has no liability.

Question 10

When the winding up partners disagree during the process:

Accepted Answer

A)  majority partner approval is required for actions in the ordinary course of winding up. 
B)  unanimous partner approval is required for every decision. 
C)  unanimous partner approval is required for actions in the ordinary course of winding up. 
D)  majority partner approval is required for every decision. 
A)  majority partner approval is required for actions in the ordinary course of winding up. 
B)  unanimous partner approval is required for every decision. 
C)  unanimous partner approval is required for actions in the ordinary course of winding up. 
D)  majority partner approval is required for every decision.

Question 11

Mark, John, and Graham are partners. Mark voluntarily and nonwrongfully leaves the partnership. However, the partnership has a three-year lease with Green Real Estate Inc. So long as Mark leaves the partnership, he is no longer liable for the lease agreement.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true about successor's liability for predecessor's obligations?

Accepted Answer

A)  Once continuation begins after dissociation, the creditors remain the creditors of the predecessor. 
B)  Partners may escape prior liabilities by forming new partnerships. 
C)  There has to be an agreement with creditors to eliminate liability for prior obligations. 
D)  The original partners are not liable for obligations incurred prior to dissociation. 
A)  Once continuation begins after dissociation, the creditors remain the creditors of the predecessor. 
B)  Partners may escape prior liabilities by forming new partnerships. 
C)  There has to be an agreement with creditors to eliminate liability for prior obligations. 
D)  The original partners are not liable for obligations incurred prior to dissociation.

Question 13

Which of the following is true about asset distribution in an LLP?

Accepted Answer

A)  If the LLP has been profitable, each partner will receive the net amount in his capital account. 
B)  The partners have liability for partnership obligations beyond the firms' assets. 
C)  An LLP partner has to contribute an amount equal to the negative balance in his account to pay creditors. 
D)  The creditors must sue the partner to force the partner to pay the debt. 
A)  If the LLP has been profitable, each partner will receive the net amount in his capital account. 
B)  The partners have liability for partnership obligations beyond the firms' assets. 
C)  An LLP partner has to contribute an amount equal to the negative balance in his account to pay creditors. 
D)  The creditors must sue the partner to force the partner to pay the debt.

Question 14

Karla retires from Orton Associates, a partnership. The business is continued by the remaining partners and Wes, a new partner who has agreed to assume Karla's liability for partnership obligations. Creditors have not been notified of Karla's retirement. What are Karla's and Wes's liabilities to the creditors?

Accepted Answer

Karla is fully liable on all obligations

Question 15

Discuss a partner's authority to borrow money during winding up.

Accepted Answer

Usually, the implied authority of a wind

Question 16

Which of the following is an apparent authority during winding up?

Accepted Answer

A)  Providing a third party notification of the dissolution. 
B)  Continue making new contracts with disregard to the third parties' awareness about the same. 
C)  Conducting business the way it was before dissolution. 
D)  Filing a Statement of Dissolution with the secretary of state. 
A)  Providing a third party notification of the dissolution. 
B)  Continue making new contracts with disregard to the third parties' awareness about the same. 
C)  Conducting business the way it was before dissolution. 
D)  Filing a Statement of Dissolution with the secretary of state.

Question 17

Carlita retires from Mortex Associates, a partnership. The business is continued by the remaining partners. What is Carlita's liability on debts incurred while she was a partner?

Accepted Answer

A)  Carlita has liability to the extent of her capital contribution. 
B)  Carlita is fully liable. 
C)  Carlita has no liability. 
D)  Carlita has liability to the extent of partnership assets at the time of dissociation. 
A)  Carlita has liability to the extent of her capital contribution. 
B)  Carlita is fully liable. 
C)  Carlita has no liability. 
D)  Carlita has liability to the extent of partnership assets at the time of dissociation.

Question 18

Barks and Paws partnership is in the business of selling pit bull dogs. After operating the partnership for one year, the state outlawed the breeding and sales of pit bulls. Assuming this is the only activity of the partnership, dissolution of the partnership will be required.

Accepted Answer

A) True 
 B)False

Question 19

Anthony, a partner of a partnership firm, was convicted for rash driving. Following this, all other partners dissociated him from the partnership, as per the terms of the agreement. This is an example of _____ dissociation.

Accepted Answer

A)  wrongful 
B)  nonwrongful 
C)  discriminatory 
D)  valid 
A)  wrongful 
B)  nonwrongful 
C)  discriminatory 
D)  valid

Question 20

Mark is a partner in Harbin Associates, a partnership. The term of the partnership agreement is one year and includes a clause on buyouts. After the term expires, Mark decides to dissociate while the remaining partners wish to continue. Under the RUPA:

Accepted Answer

A)  the remaining partners must wind up and terminate the partnership. 
B)  they must buy out Mark of his interest on Mark's demand for the same. 
C)  they must not pay Mark the greater of the liquidation price or the sale price of the business. 
D)  they can renew their partnership agreement. 
A)  the remaining partners must wind up and terminate the partnership. 
B)  they must buy out Mark of his interest on Mark's demand for the same. 
C)  they must not pay Mark the greater of the liquidation price or the sale price of the business. 
D)  they can renew their partnership agreement.

Exam 39: Partners Dissociation and Partnerships Dissolution and Winding up

If a partner fails to contribute the amount equal to her negative capital account balance, then it can be recovered:

Which of the following causes a dissociation of a partnership?

Amos, Beverly, Carlos, and Dan were partners in a partnership in which the agreement states that the partnership will continue until 2010. Amos died in 2006. What vote of the remaining partners is necessary to continue operating the partnership business?

Which of the following is true about the effect of LLP statutes after appointment of a new partner?

Termination occurs after all partnership assets have been distributed.

Which of the following causes dissociation?

Which of the following is true about eliminating partners' apparent authority?

Poxabogue Associates, a partnership, is dissociated by the retirement of a partner. The business is continued by the remaining partners and a new partner, Enrica. What is Enrica's liability to creditors for partnership obligations that arose before she became a partner?

When the winding up partners disagree during the process:

Mark, John, and Graham are partners. Mark voluntarily and nonwrongfully leaves the partnership. However, the partnership has a three-year lease with Green Real Estate Inc. So long as Mark leaves the partnership, he is no longer liable for the lease agreement.

Which of the following is true about successor's liability for predecessor's obligations?

Which of the following is true about asset distribution in an LLP?

Discuss a partner's authority to borrow money during winding up.

Which of the following is an apparent authority during winding up?

Carlita retires from Mortex Associates, a partnership. The business is continued by the remaining partners. What is Carlita's liability on debts incurred while she was a partner?

Barks and Paws partnership is in the business of selling pit bull dogs. After operating the partnership for one year, the state outlawed the breeding and sales of pit bulls. Assuming this is the only activity of the partnership, dissolution of the partnership will be required.

Anthony, a partner of a partnership firm, was convicted for rash driving. Following this, all other partners dissociated him from the partnership, as per the terms of the agreement. This is an example of _____ dissociation.

Mark is a partner in Harbin Associates, a partnership. The term of the partnership agreement is one year and includes a clause on buyouts. After the term expires, Mark decides to dissociate while the remaining partners wish to continue. Under the RUPA:

The Nature of Law

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Crimes

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