Question 1

A sole proprietorship is the most complex form of business organization.

Accepted Answer

A) True 
 B)False

Question 2

Why should the death or withdrawal of a partner result in dissolution of a partnership?

Accepted Answer

Even though partners have unlimited liab

Question 3

When a limited partnership "winds up," partners receive unpaid distributions before capital contributions.

Accepted Answer

A) True 
 B)False

Question 4

Partners are jointly and severally liable for the contracts and debts of the partnership.

Accepted Answer

A) True 
 B)False

Question 5

The goal of the UPA was to establish consistent partnership law throughout the United States.

Accepted Answer

A) True 
 B)False

Question 6

For which torts can a partner be held responsible?

Accepted Answer

A)  only the torts committed by that particular partner 
B)  any tort committed by any partner (including oneself) in the partnership 
C)  any tort committed by any partner (including oneself) in the course and scope of the partnership business 
D)  any tort committed by any partner (including oneself) with the knowledge of at least one other partner 
E)  any intentional or grossly negligent tort committed by any partner (including oneself), but for torts involving mere ordinary negligence, only the torts committed by that particular partner 
A)  only the torts committed by that particular partner 
B)  any tort committed by any partner (including oneself) in the partnership 
C)  any tort committed by any partner (including oneself) in the course and scope of the partnership business 
D)  any tort committed by any partner (including oneself) with the knowledge of at least one other partner 
E)  any intentional or grossly negligent tort committed by any partner (including oneself), but for torts involving mere ordinary negligence, only the torts committed by that particular partner

Question 7

Which of the following is true regarding the liability of the partners in a limited partnership?

Accepted Answer

A)  Both the limited and general partners have unlimited liability for partnership debts. 
B)  Neither the limited nor the general partners have unlimited liability for partnership debts. 
C)  The limited partners have limited liability and the general partners have unlimited liability for partnership debts. 
D)  The limited partners have unlimited liability, and the general partners have limited liability, for partnership debts. 
E)  If a corporation is a partner, its shareholders have unlimited liability for partnership debts. 
A)  Both the limited and general partners have unlimited liability for partnership debts. 
B)  Neither the limited nor the general partners have unlimited liability for partnership debts. 
C)  The limited partners have limited liability and the general partners have unlimited liability for partnership debts. 
D)  The limited partners have unlimited liability, and the general partners have limited liability, for partnership debts. 
E)  If a corporation is a partner, its shareholders have unlimited liability for partnership debts.

Question 8

Upon the death of a partner:

Accepted Answer

A)  the deceased partner's right in specific partnership property vests in the remaining partner or partners. 
B)  the deceased partner's right in specific partnership property vests in his or her heirs or next of kin. 
C)  the deceased partner's right in specific partnership property is held in trust for the deceased's heirs or next of kin until the last remaining partner dies. 
D)  the deceased partner's right in the partnership passes to his or her heirs or next of kin upon his or her death. 
E)  the deceased partner's right in the partnership is held in trust for the deceased's heirs or next of kin until the last remaining partner dies. 
A)  the deceased partner's right in specific partnership property vests in the remaining partner or partners. 
B)  the deceased partner's right in specific partnership property vests in his or her heirs or next of kin. 
C)  the deceased partner's right in specific partnership property is held in trust for the deceased's heirs or next of kin until the last remaining partner dies. 
D)  the deceased partner's right in the partnership passes to his or her heirs or next of kin upon his or her death. 
E)  the deceased partner's right in the partnership is held in trust for the deceased's heirs or next of kin until the last remaining partner dies.

Question 9

Adam,Bob,Charlie and Dan formed an architecture general partnership in 1992.Business went well for many years,until Adam began "cutting corners" on his jobs in 2000.He was voted out of the partnership in December of 2000.In June of 2001,the partnership and all four partners were sued by one of Adam's clients.In October 2001,Ed was admitted to the partnership.In March of 2003,three lawsuits were filed against the firm and its partners.The first was based on Adam's work in 1999.The second was based on Bob's work in 2000.The third was based on Charlie's work in 2002.Discuss Ed's liability for these lawsuits.

Accepted Answer

The crucial factor is whether the obliga

Question 10

The Uniform Partnership Act codifies general partnership law.

Accepted Answer

A) True 
 B)False

Question 11

What is the consequence of failing to give adequate notice of partnership dissolution to third parties?

Accepted Answer

A)  The partnership's attempted dissolution will be ineffective. 
B)  The partners will be prevented from receiving their share of partnership assets. 
C)  There will be a court-ordered waiting period before partners can receive their share of partnership assets. 
D)  Partners might be personally liable for transactions entered into by other partners occurring after the partnership dissolution. 
E)  Partners could be liable for criminal penalties under the Uniform Partnership Act. 
A)  The partnership's attempted dissolution will be ineffective. 
B)  The partners will be prevented from receiving their share of partnership assets. 
C)  There will be a court-ordered waiting period before partners can receive their share of partnership assets. 
D)  Partners might be personally liable for transactions entered into by other partners occurring after the partnership dissolution. 
E)  Partners could be liable for criminal penalties under the Uniform Partnership Act.

Question 12

Another terms for limited partnership is limited liability company (LLC).

Accepted Answer

A) True 
 B)False

Question 13

No inference of the existence of a general partnership is drawn if profits are received in payment of a debt owed to a creditor in installments or otherwise.

Accepted Answer

A) True 
 B)False

Question 14

A sole proprietorship can be easily transferred or sold if and when the owner desires to do so; no other approval (such as from partners or shareholders)is necessary.

Accepted Answer

A) True 
 B)False

Question 15

After owning and operating a business for eight years,Bud recently sold it to Lou.Since Lou is a recent graduate,and this is his first business venture,Lou would be considered an entrepreneur.

Accepted Answer

A) True 
 B)False

Question 16

Upon partnership dissolution,the remaining partners have the right to continue a new partnership.

Accepted Answer

A) True 
 B)False

Question 17

In April 2010,Mary joins an architectural firm as a new partner in a general partnership,bringing the total partnership to five partners.Mary invests $40,000 in order to be admitted to this partnership.In June,the partnership is sued for malpractice in connection with a building designed in 2009 by a partner who resigned in January 2010.In November 2010,a jury awards $300,000 in connection with the case.What is the maximum amount that Mary could be liable for in connection with this lawsuit?

Accepted Answer

A)  nothing, because the partner who caused the problem is no longer in the partnership 
B)  nothing, because the malpractice was committed before Mary became a partner 
C)  $40,000, the amount of Mary's investment 
D)  $60,000, one-fifth the amount of the judgment 
E)  $300,000, the total amount of the judgment 
A)  nothing, because the partner who caused the problem is no longer in the partnership 
B)  nothing, because the malpractice was committed before Mary became a partner 
C)  $40,000, the amount of Mary's investment 
D)  $60,000, one-fifth the amount of the judgment 
E)  $300,000, the total amount of the judgment

Question 18

A limited partner does not have any liability in connection with the partnership.

Accepted Answer

A) True 
 B)False

Question 19

An inference of the existence of a general partnership is drawn if profits are received in payment of an annuity owed to a widow,widower,or representative of a deceased partner.

Accepted Answer

A) True 
 B)False

Question 20

Jane and Joan decide to open a plumbing business.Both contribute money to the business,but because Jane has expertise in plumbing,Joan allows Jane to make all the management decisions.Joan will not participate in much of the day-to-day operations,but could do so if she wanted to.Jane and Joan will split net income equally.Jane and Joan make no filings associated with this business.This enterprise is:

Accepted Answer

A)  a general partnership. 
B)  not a general partnership, because there is no association of two or more people. 
C)  not a general partnership, because they are not carrying on a trade or business. 
D)  not a general partnership, because they do not co-own the business. 
E)  not a general partnership, because Joan does not have management responsibilities. 
A)  a general partnership. 
B)  not a general partnership, because there is no association of two or more people. 
C)  not a general partnership, because they are not carrying on a trade or business. 
D)  not a general partnership, because they do not co-own the business. 
E)  not a general partnership, because Joan does not have management responsibilities.

Exam 26: Small Business, Entrepreneurship, and Partnerships

A sole proprietorship is the most complex form of business organization.

Why should the death or withdrawal of a partner result in dissolution of a partnership?

When a limited partnership "winds up," partners receive unpaid distributions before capital contributions.

Partners are jointly and severally liable for the contracts and debts of the partnership.

The goal of the UPA was to establish consistent partnership law throughout the United States.

For which torts can a partner be held responsible?

Which of the following is true regarding the liability of the partners in a limited partnership?

Upon the death of a partner:

The Uniform Partnership Act codifies general partnership law.

What is the consequence of failing to give adequate notice of partnership dissolution to third parties?

Another terms for limited partnership is limited liability company (LLC).

No inference of the existence of a general partnership is drawn if profits are received in payment of a debt owed to a creditor in installments or otherwise.

A sole proprietorship can be easily transferred or sold if and when the owner desires to do so; no other approval (such as from partners or shareholders)is necessary.

After owning and operating a business for eight years,Bud recently sold it to Lou.Since Lou is a recent graduate,and this is his first business venture,Lou would be considered an entrepreneur.

Upon partnership dissolution,the remaining partners have the right to continue a new partnership.

A limited partner does not have any liability in connection with the partnership.

An inference of the existence of a general partnership is drawn if profits are received in payment of an annuity owed to a widow,widower,or representative of a deceased partner.

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