Question 1

Tom and Bill are partners in Tough Trucks Towing. James is not a partner. In dealing with Fred, James holds himself out to be a partner in Tough Trucks Towing and Fred contracts to have Tough Trucks Towing tow some vehicles for him. If Tough Trucks fails to tow the vehicles, a court may conclude that

Accepted Answer

A)   a partnership by estoppel exists and James is liable to Fred.
B)   no partnership exists and James is not liable to Fred.
C)   a partnership by estoppel exists and Fred has all partnership rights.
D)   no partnership exists, but Tom and Bill are liable to Fred. A

Question 2

A partner may dissociate from a partnership by declaring bankruptcy..

Accepted Answer

A) True 
 B)False  True

Question 3

In a limited partnership, a limited partner has full responsibility for the partnership and for all its debts.

Accepted Answer

A) True 
 B)False  False

Question 4

An assignment of the interest of a limited partner dissolves a limited partnership.

Accepted Answer

A) True 
 B)False

Question 5

Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The U.S. government declares that the equipment can no longer be exported. J&K

Accepted Answer

A)   dissolves as soon as the stated term expires.
B)   dissolves as soon as the partners agree to dissolve it.
C)   dissolves immediately unless the partners change its business.
D)   does not dissolve.

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

Partnership profits must be shared in the same proportion as the partners' investment of capital in the firm.

Accepted Answer

A) True 
 B)False

Question 9

Fact Pattern 27-1
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
-Refer to Fact Pattern 27-1. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal's liability for partnership debts incurred before his admission is

Accepted Answer

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

Question 10

For most purposes, the law recognizes a partnership as an independent entity.

Accepted Answer

A) True 
 B)False

Question 11

Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is

Accepted Answer

A)   Ben's creditor and partner.
B)   Ben's creditor only.
C)   Ben's partner only.
D)   neither Ben's creditor nor his partner.

Question 12

A partner is entitled to make secret profits or put self-interest before his or her duty to the interest of the partnership.

Accepted Answer

A) True 
 B)False

Question 13

A partner's profit from a partnership is taxed as income to the firm.

Accepted Answer

A) True 
 B)False

Question 14

In a general partnership, the partners are personally liable for the debts of the partnership.

Accepted Answer

A) True 
 B)False

Question 15

Guy and Hanna do business as G-H Associates. If G-H is a partnership, it 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 in the presence of an express agreement.
D)   under all circumstances.

Question 16

Property acquired by the partnership is the property of the partners individually.

Accepted Answer

A) True 
 B)False

Question 17

Fact Pattern 27-1
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
-Refer to Fact Pattern 27-1. 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.

Question 18

A partnership agreement can include almost any terms that the partners wish.

Accepted Answer

A) True 
 B)False

Question 19

In a general partnership, the acts of one partner in the ordinary course of business subjects both the partner and the firm to liability.

Accepted Answer

A) True 
 B)False

Question 20

Newt is considering forms of business organization for Newton Design, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for

Accepted Answer

A)   their own wrongful acts.
B)   only other partners' malpractice.
C)   only partnership obligations that exceed capital contributions.
D)   only partnership obligations that fall within capital contributions.

Exam 27: All Forms of Partnership

A partner may dissociate from a partnership by declaring bankruptcy..

In a limited partnership, a limited partner has full responsibility for the partnership and for all its debts.

An assignment of the interest of a limited partner dissolves a limited partnership.

Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The U.S. government declares that the equipment can no longer be exported. J&K

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.

Partnership profits must be shared in the same proportion as the partners' investment of capital in the firm.

Fact Pattern 27-1 Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. -Refer to Fact Pattern 27-1. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal's liability for partnership debts incurred before his admission is

For most purposes, the law recognizes a partnership as an independent entity.

Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is

A partner is entitled to make secret profits or put self-interest before his or her duty to the interest of the partnership.

A partner's profit from a partnership is taxed as income to the firm.

In a general partnership, the partners are personally liable for the debts of the partnership.

Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act

Property acquired by the partnership is the property of the partners individually.

Fact Pattern 27-1 Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. -Refer to Fact Pattern 27-1. Brad's dissociation from the firm results in

A partnership agreement can include almost any terms that the partners wish.

In a general partnership, the acts of one partner in the ordinary course of business subjects both the partner and the firm to liability.

Newt is considering forms of business organization for Newton Design, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for