Question 1

What is the effect of having a corporation as the general partner of a limited partnership?

Accepted Answer

A)  The limited liability of the corporation will result in the limited partners having greater liability than they would otherwise. 
B)  Each shareholder of the corporation will be treated as a limited partner of the limited partnership. 
C)  Each shareholder of the corporation will be treated as a general partner of the limited partnership. 
D)  The liability of the corporate general partner will be limited to the amount of its assets. 
A)  The limited liability of the corporation will result in the limited partners having greater liability than they would otherwise. 
B)  Each shareholder of the corporation will be treated as a limited partner of the limited partnership. 
C)  Each shareholder of the corporation will be treated as a general partner of the limited partnership. 
D)  The liability of the corporate general partner will be limited to the amount of its assets.

Question 2

The firm name of a limited partnership may include the surname of a limited partner if the business was carried on under that name before the admission of the limited partner.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about articles of limited partnership?

Accepted Answer

A)  The articles must be filed along with the certificate of limited partnership. 
B)  The articles of limited partnership apply to the general partners only. 
C)  Without articles of limited partnership,the partnership will be treated as a general partnership. 
D)  If there are no articles of limited partnership,the certificate of limited partnership will serve as the articles. 
A)  The articles must be filed along with the certificate of limited partnership. 
B)  The articles of limited partnership apply to the general partners only. 
C)  Without articles of limited partnership,the partnership will be treated as a general partnership. 
D)  If there are no articles of limited partnership,the certificate of limited partnership will serve as the articles.

Question 4

The general partners of a limited partnership have unlimited liability for the debts and obligations of the limited partnerships.

Accepted Answer

A) True 
 B)False

Question 5

What is the effect of a limited partner making a personal guarantee on behalf of a limited partnership of which the guarantor is a limited partner?

Accepted Answer

A)  It results in the limited partner being treated as a general partner for liability purposes. 
B)  The guarantee is void because it goes against the nature of limited liability. 
C)  The guarantee would be born by the general partners because they have unlimited liability. 
D)  The limited partner will be held liable on the guarantee up to the amount of his investment in the limited partnership. 
E)  The limited partner will be liable under the terms of the guarantee,but will otherwise continue to be treated as a limited partner. 
A)  It results in the limited partner being treated as a general partner for liability purposes. 
B)  The guarantee is void because it goes against the nature of limited liability. 
C)  The guarantee would be born by the general partners because they have unlimited liability. 
D)  The limited partner will be held liable on the guarantee up to the amount of his investment in the limited partnership. 
E)  The limited partner will be liable under the terms of the guarantee,but will otherwise continue to be treated as a limited partner.

Question 6

So long as there is at least one general and one limited partner,there are no restrictions on the number of each type of partner in a limited partnership.

Accepted Answer

A) True 
 B)False

Question 7

A person may be considered a limited partner and a general partner in the same partnership at the same time.

Accepted Answer

A) True 
 B)False

Question 8

What must be done by a limited partnership that is properly registered in one state in order to conduct business in another state?

Accepted Answer

A)  Nothing,because the home state registration is good in all states. 
B)  It must obtain a certificate of limited partnership just as it had in the first state. 
C)  It must clearly indicate that it is formed in a different state to all parties with whom it does business. 
D)  It must obtain a registered agent in the new state. 
E)  It must obtain a certificate of registration in the new state. 
A)  Nothing,because the home state registration is good in all states. 
B)  It must obtain a certificate of limited partnership just as it had in the first state. 
C)  It must clearly indicate that it is formed in a different state to all parties with whom it does business. 
D)  It must obtain a registered agent in the new state. 
E)  It must obtain a certificate of registration in the new state.

Question 9

The Good Times limited partnership has already seen all of its good times pass by.Its partnership agreement set the order of distribution as first to general partners,second to creditors,last to limited partners.Assuming there were no further details in the agreement,explain in detail the priority of distribution.

Accepted Answer

Normally creditors are paid first.Althou

Question 10

Which of the following is true about a corporation being a general partner in a limited partnership?

Accepted Answer

A)  A corporation cannot be a general partner in a limited partnership. 
B)  A corporation can be a general partner in a limited partnership only if it is not the sole general partner in the limited partnership. 
C)  A corporation can be a general partner in a limited partnership only if there is at least one other general partner that is not a corporation. 
D)  A corporation can be a general partner in a limited partnership even if it is the only general partner. 
A)  A corporation cannot be a general partner in a limited partnership. 
B)  A corporation can be a general partner in a limited partnership only if it is not the sole general partner in the limited partnership. 
C)  A corporation can be a general partner in a limited partnership only if there is at least one other general partner that is not a corporation. 
D)  A corporation can be a general partner in a limited partnership even if it is the only general partner.

Question 11

Which of the following must occur upon the conclusion of the winding-up process of a limited partnership?

Accepted Answer

A)  The general partners must post a bond to cover potential claims against the partnership. 
B)  A certificate of cancellation must be filed with the secretary of state in the state of organization. 
C)  To protect their limited liability,the limited partners must give notice of the termination of the partnership to those parties with whom the partnership has dealt. 
D)  The limited partners must receive their capital investment before the general partners receive theirs. 
A)  The general partners must post a bond to cover potential claims against the partnership. 
B)  A certificate of cancellation must be filed with the secretary of state in the state of organization. 
C)  To protect their limited liability,the limited partners must give notice of the termination of the partnership to those parties with whom the partnership has dealt. 
D)  The limited partners must receive their capital investment before the general partners receive theirs.

Question 12

How might an entrepreneur take steps to minimize the unlimited liability of a sole proprietorship?

Accepted Answer

Before limited liability companies were

Question 13

The limited partnership can waive the right of partners to approve the admission of new general partners.

Accepted Answer

A) True 
 B)False

Question 14

Where there is no agreement in a limited partnership regarding the allocation of profits,how are they allocated?

Accepted Answer

A)  equally among all the partners 
B)  one-half equally among the general partners,one half equally among the limited partners 
C)  among all partners,in proportion to capital invested in the partnership 
D)  one-half among limited partners in proportion to capital invested,and one half among general partners in proportion to capital invested 
E)  in accordance with which partners generated the profits 
A)  equally among all the partners 
B)  one-half equally among the general partners,one half equally among the limited partners 
C)  among all partners,in proportion to capital invested in the partnership 
D)  one-half among limited partners in proportion to capital invested,and one half among general partners in proportion to capital invested 
E)  in accordance with which partners generated the profits

Question 15

Cindy is one of 50 limited partners in a real estate investment limited partnership.The general partner is Evergreen Corporation.Evergreen Corporation invested $500,000 in the partnership and each of the limited partners all of whom are natural persons,invested $10,000.Evergreen has four shareholders.If the real estate partnership is dissolved at a time when it has debts exceeding assets,which of the following is true?

Accepted Answer

A)  Because having a corporation means that no partner in the limited partnership has unlimited liability,the limited partners would have unlimited liability. 
B)  Because having a corporation means that no partner in the limited partnership has unlimited liability,the shareholders of the corporation would have unlimited liability. 
C)  Neither the corporation nor the limited partners would be required to contribute any assets toward the satisfaction of the unpaid obligations of the limited partnership. 
D)  The limited partners would not need to contribute any amounts to the satisfaction of the debts,but the assets of the corporation would be available for this purpose. 
A)  Because having a corporation means that no partner in the limited partnership has unlimited liability,the limited partners would have unlimited liability. 
B)  Because having a corporation means that no partner in the limited partnership has unlimited liability,the shareholders of the corporation would have unlimited liability. 
C)  Neither the corporation nor the limited partners would be required to contribute any assets toward the satisfaction of the unpaid obligations of the limited partnership. 
D)  The limited partners would not need to contribute any amounts to the satisfaction of the debts,but the assets of the corporation would be available for this purpose.

Question 16

A limited partner is liable for losses regardless of his or her contribution.

Accepted Answer

A) True 
 B)False

Question 17

Each limited partner has the right to obtain from the general partners true and full information regarding the state of the business.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a consequence of defective formation of a limited partnership?

Accepted Answer

A)  Contracts entered into by the partnership will be void. 
B)  Contracts entered into by the partnership will be voidable by the other party. 
C)  The rights as between the partners will be different based on the defective formation. 
D)  A partner who would have been a limited partner,might have unlimited liability to a third party who conducted business with a good faith belief that the partner was a general partner. 
E)  A partner who would have been a limited partner will have unlimited liability to all third parties who conduct business with the partnership during the period of defective formation of the limited partnership. 
A)  Contracts entered into by the partnership will be void. 
B)  Contracts entered into by the partnership will be voidable by the other party. 
C)  The rights as between the partners will be different based on the defective formation. 
D)  A partner who would have been a limited partner,might have unlimited liability to a third party who conducted business with a good faith belief that the partner was a general partner. 
E)  A partner who would have been a limited partner will have unlimited liability to all third parties who conduct business with the partnership during the period of defective formation of the limited partnership.

Question 19

Lisa entered into a limited partnership as a limited partner by investing $25,000 in cash.There was a total of 50 limited partners and 20 general partners.The partners elected a management committee that included two of the general partners and Lisa as one of the limited partners.The certificate of limited partnership was completed,but was filed with the wrong office.The partnership then commenced business.Some of the parties with whom it conducted business assumed that the partnership was a general partnership because they searched the records of the secretary of state and found no certificate of limited partnership or any other record.Others assumed that it was a general partnership but had not actually searched the filings.Still others assumed that it was a limited partnership.In addition,among those who assumed that it was a limited partnership,some assumed that Lisa was a general partner and others did not.Discuss Lisa's situation with respect to personal liability for partnership debts.

Accepted Answer

Lisa would have personal liability to th

Question 20

A master limited partnership is one that is traded on an organized securities exchange such as the New York Stock Exchange.

Accepted Answer

A) True 
 B)False

Exam 35: Limited Partnerships and Limited Liability Limited Partnerships

What is the effect of having a corporation as the general partner of a limited partnership?

The firm name of a limited partnership may include the surname of a limited partner if the business was carried on under that name before the admission of the limited partner.

Which of the following is true about articles of limited partnership?

The general partners of a limited partnership have unlimited liability for the debts and obligations of the limited partnerships.

What is the effect of a limited partner making a personal guarantee on behalf of a limited partnership of which the guarantor is a limited partner?

So long as there is at least one general and one limited partner,there are no restrictions on the number of each type of partner in a limited partnership.

A person may be considered a limited partner and a general partner in the same partnership at the same time.

What must be done by a limited partnership that is properly registered in one state in order to conduct business in another state?

Which of the following is true about a corporation being a general partner in a limited partnership?

Which of the following must occur upon the conclusion of the winding-up process of a limited partnership?

How might an entrepreneur take steps to minimize the unlimited liability of a sole proprietorship?

The limited partnership can waive the right of partners to approve the admission of new general partners.

Where there is no agreement in a limited partnership regarding the allocation of profits,how are they allocated?

A limited partner is liable for losses regardless of his or her contribution.

Each limited partner has the right to obtain from the general partners true and full information regarding the state of the business.

Which of the following is a consequence of defective formation of a limited partnership?

A master limited partnership is one that is traded on an organized securities exchange such as the New York Stock Exchange.

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