Deck 31: Dissolution of a Partnership

Question 1

The death of a partner automatically dissolves the partnership unless the partnership agreement provides otherwise.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

What can happen if one partner develops an incapacity that makes it impossible for that partner to perform the services contemplated by the partnership agreement?

A)A court will order dissolution even if the incapacity is temporary.
B)The other partners can expel the incapacitated partner from the partnership.
C)The other partners can dissolve the partnership.
D)A court must judge whether the partnership should be dissolved.

Answer 3

D

Question 4

When one partner dies, the other partners must:

A)Distribute the deceased partner's capital among themselves.
B)Declare the partnership futile.
C)Admit the deceased's representative as a partner.
D)Dissolve the partnership unless the partnership agreement states otherwise .

Question 5

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

A)It is paying all the outstanding obligations of the partnership.
B)It is the re-distribution of capital among the partners.
C)It is the change in the relation of the partners by ending the present legal entity.
D)It is a change in the relation of the partners by adding one.

Question 6

Bankruptcy of a partnership does not terminate it.

Question 7

When a partnership is dissolved, its assets are first paid to:

A)Partners as a return of their capital contribution.
B)Creditors to pay partnership debts.
C)Partners who have advanced money to the firm.
D)Representatives of deceased partners.

Question 8

A withdrawing partner is entitled to:

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

Question 9

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

Question 10

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

Question 11

A court will not dissolve a partnership for misconduct if one partner:

A)Files a petition for personal bankruptcy.
B)Abandons the business.
C)Persistently violates the partnership agreement.
D)Engages in dishonesty.

Question 12

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

Question 13

Brothers Inc., a partnership, consisted of three partners Jessie, Mark, and Jake. However, Jessie was declared bankrupt at a time the company suffered considerable losses. Which of the following is likely to be true?

A)Jessie's unlimited liability is destroyed
B)Jessie can continue to be a partner in the firm.
C)Jake and Mark can enforce liability for partnership debts on Jessie
D)Jessie's trustee must be admitted as a full partner

Question 14

Under the Revised Uniform Partnership Act, a court may issue a decree of dissolution when a partner's conduct makes it impractical to carry on business in conformity with the partnership agreement.

Question 15

Explain the dissolution of a partnership on the basis of futility. ​

Question 16

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

A)The law requires notice of dissolution to be given through a newspaper.
B)Notice of dissolution is not necessary when a dormant or a secret partner retires.
C)Notice of dissolution is necessary when the partnership is dissolved by a judicial decree.
D)Notice of dissolution is necessary when a partnership is dissolved by the operation of law.

Question 17

A partner may be expelled who has engaged in conduct against the principles of good faith and loyalty.

Question 18

When a date for dissolution is set in the partnership agreement, the partnership cannot be dissolved before that date. ​

Question 19

A withdrawing partner has liability for any loss sustained by the other partners because of the withdrawal.

Question 20

After dissolution, a third person making a contract with the partnership stands in a similar position as a person dealing with an agent whose authority has been revoked.