Exam 30: Formation and Internal Relations of General Partnerships

In some corporations, only the shareholders are taxed; in others, both the corporation as an entity is taxed and the shareholders are taxed as well.

Colleen, Joanna, and Ellen form Capital City Company, a partnership.Colleen contributes expertise; Joanna, $15,000; and Ellen, $20,000.After a year, Joanna adds $12,000 as a loan.Ten years later, Capital owes $44,000 to creditors, total assets are $112,000, and they decide to dissolve the business.How will these assets be distributed and what will each receive?

Which of the following is NOT an advantage of a partnership?

Because the statute of frauds does not apply expressly to a contract for the formation of a partnership, usually no writing is required to create the relationship.

Michelle and Margaret agree to form a partnership.The partnership contract between Michelle and Margaret does not have to be in writing in order to be enforceable in the courts.

A limited liability company (LLC) provides limited liability to all of its owners and permits all of its owners to participate in management.

In which of the following situations would the persons be partners?

Clark and David are partners.Clark has contributed $25,000.David has contributed only his time and skill.On dissolution, after all firm debts are paid, $20,000 in assets remains.Which of the following is NOT correct?

Assume that you and your best friend have decided to form a partnership after graduation.You have both studied business law, so you both know the importance of having a written partnership agreement.Summarize the clauses that you would include in your partnership agreement.

General Widget partnership assets amount to $34,000 after liquidation.Frank, Gene, and Hank, equal partners, each contributed $3,000 into the capital pool at the inception of the business.Gene later loaned the business $5,000.They owe $23,000 to creditors for inventory.What will Gene get in distribution, assuming there is no agreement on the distribution of profits?

Which of the following is the correct definition for a partnership?

Marilyn, George, and Christine pool their money to buy land for a vegetable garden.They plan to sell the produce at a roadside stand that summer.Are they partners?

White, Gray, and Greene enter into a contract to form a partnership, but the contract says nothing about the sharing of profits and losses.Which of the following will take place?

A corporation may not be a partner in a partnership.

The form of business association known as a partnership can be traced to ancient Babylonia and classical Greece and was used in England during the Middle Ages.

Identify six rights the law provides to partners.

Which of the following is true of a partner's fiduciary duty?

The newly formed Bright Partnership cannot commence business until it meets its state's required minimum amount of capitalization.

General partnerships are frequently used in finance, accounting, real estate, and law.

Terry and Ernest agree to become partners in advertising and promoting the Midway Fair to be held three years hence.If they agree orally, will the partnership agreement be enforceable?