Question 1

Sole proprietors have limited liability for the sole proprietorship's debts.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) Partners' income taxes may be less than the income taxes would be on a corporation. 
B) Each partner has limited liability. 
C) It is possible to bring together more managerial skills than in a sole proprietorship. 
D) It is possible to bring together more capital than in a sole proprietorship. 
A) Partners' income taxes may be less than the income taxes would be on a corporation. 
B) Each partner has limited liability. 
C) It is possible to bring together more managerial skills than in a sole proprietorship. 
D) It is possible to bring together more capital than in a sole proprietorship.

Question 3

Arthur,Betty,and Clara each inherit an undivided one-third interest in an apartment complex.Instead of selling it,they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money.What are they?

Accepted Answer

A) A partnership. 
B) Co-owners only. 
C) A corporation. 
D) Creditors of the apartment complex. 
A) A partnership. 
B) Co-owners only. 
C) A corporation. 
D) Creditors of the apartment complex.

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Anita,in violation of a specific agreement not to extend credit over $1,000 without the other partners' approval,extends credit of $2,000 to a friend.Anita will be held personally liable to the partners for any unpaid debt since she violated the duty of obedience.

Accepted Answer

A) True 
 B)False

Question 6

General partners differ from limited partners only in the amount of input they have in partnership decisions.

Accepted Answer

A) True 
 B)False

Question 7

In the case of Thomas v.Lloyd,the court held:

Accepted Answer

A) the use of land by a partnership is determinative of the fact that the land is owned by the partnership. 
B) whether real estate titled in the names of individual partners is partnership property is a question of fact, and the burden of proof is on the one alleging that the actual ownership does not match the names on the legal title. 
C) payment of real estate taxes out of partnership funds is determinative of the fact that the land is a partnership asset. 
D) payment of promissory note payments for the real estate out of partnership funds is determinative of the fact that the realty is a partnership asset. 
A) the use of land by a partnership is determinative of the fact that the land is owned by the partnership. 
B) whether real estate titled in the names of individual partners is partnership property is a question of fact, and the burden of proof is on the one alleging that the actual ownership does not match the names on the legal title. 
C) payment of real estate taxes out of partnership funds is determinative of the fact that the land is a partnership asset. 
D) payment of promissory note payments for the real estate out of partnership funds is determinative of the fact that the realty is a partnership asset.

Question 8

Which of the following is correct with regard to partnership property?

Accepted Answer

A) Like partnership capital, it is a fixed amount set forth in the articles of partnership. 
B) Under the RUPA, there is a rebuttable presumption that unless a contrary intention appears, property acquired with partnership funds is partnership property. 
C) The RUPA sets forth two irrebuttable presumptions that apply when the partners did not express their intent, one of which is that property acquired in the name of one of the partners without an indication of her capacity as a partner and without use of partnership funds is presumed to be that partner's separate property. 
D) If there is no express agreement whether property owned by a partner before formation of the partnership and used in the partnership business is an asset of the partnership, the fact that taxes, liens, and expenses have been paid by the partnership is irrelevant. 
A) Like partnership capital, it is a fixed amount set forth in the articles of partnership. 
B) Under the RUPA, there is a rebuttable presumption that unless a contrary intention appears, property acquired with partnership funds is partnership property. 
C) The RUPA sets forth two irrebuttable presumptions that apply when the partners did not express their intent, one of which is that property acquired in the name of one of the partners without an indication of her capacity as a partner and without use of partnership funds is presumed to be that partner's separate property. 
D) If there is no express agreement whether property owned by a partner before formation of the partnership and used in the partnership business is an asset of the partnership, the fact that taxes, liens, and expenses have been paid by the partnership is irrelevant.

Question 9

Under the common law,a partnership was generally considered to be a legal entity rather than an aggregate of individuals.

Accepted Answer

A) True 
 B)False

Question 10

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions ordinarily results in a:

Accepted Answer

A) partnership. 
B) joint venture. 
C) corporation. 
D) R & D partnership. 
A) partnership. 
B) joint venture. 
C) corporation. 
D) R & D partnership.

Question 11

"Partnership property" is the sum of the partnership's assets,including all property acquired by a partnership.

Accepted Answer

A) True 
 B)False

Question 12

Partners may elect whether or not the partnership will be taxed as a separate entity.

Accepted Answer

A) True 
 B)False

Question 13

To be partnership property,title to real estate bought with partnership assets and used by the partnership may be put in the name of:

Accepted Answer

A) any partner in that individual's name. 
B) the partnership only. 
C) the partnership in its name, or one or more partners in their capacity as partners in the partnership if the name of the partnership is indicated in the instrument transferring title. 
D) None of the above. 
A) any partner in that individual's name. 
B) the partnership only. 
C) the partnership in its name, or one or more partners in their capacity as partners in the partnership if the name of the partnership is indicated in the instrument transferring title. 
D) None of the above.

Question 14

A general partnership is formed without any formality and no documents need be filed with the state.

Accepted Answer

A) True 
 B)False

Question 15

Some states allow the formation of partnerships in which all partners have limited liability.

Accepted Answer

A) True 
 B)False

Question 16

A partnership agreement should include all but which one of the following?

Accepted Answer

A) The duties of the partners. 
B) The capital contribution of the partners. 
C) The agreement for dividing tax liability of the partnership. 
D) The division of profits and losses. 
A) The duties of the partners. 
B) The capital contribution of the partners. 
C) The agreement for dividing tax liability of the partnership. 
D) The division of profits and losses.

Question 17

Each partner,unless otherwise agreed,has equal rights in the management and conduct of the business of a general or a limited partnership.

Accepted Answer

A) True 
 B)False

Question 18

The RUPA cannot be modified by agreement of the partners to a partnership.Its provisions must be strictly followed in any partnership agreement.

Accepted Answer

A) True 
 B)False

Question 19

Under the RUPA,a partner is a co-owner of partnership property.

Accepted Answer

A) True 
 B)False

Question 20

The law establishes a test for determining whether a partnership has been formed.The test includes which of the following?

Accepted Answer

A) An association of two or more persons. 
B) Conducting a business not necessarily for profit. 
C) That the partnership agreement is filed with the Secretary of State. 
D) The sharing of gross returns. 
A) An association of two or more persons. 
B) Conducting a business not necessarily for profit. 
C) That the partnership agreement is filed with the Secretary of State. 
D) The sharing of gross returns.

Exam 30: Formation and Internal Relations of General Partnerships

Sole proprietors have limited liability for the sole proprietorship's debts.

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

Arthur,Betty,and Clara each inherit an undivided one-third interest in an apartment complex.Instead of selling it,they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money.What are they?

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.

Anita,in violation of a specific agreement not to extend credit over $1,000 without the other partners' approval,extends credit of $2,000 to a friend.Anita will be held personally liable to the partners for any unpaid debt since she violated the duty of obedience.

General partners differ from limited partners only in the amount of input they have in partnership decisions.

In the case of Thomas v.Lloyd,the court held:

Which of the following is correct with regard to partnership property?

Under the common law,a partnership was generally considered to be a legal entity rather than an aggregate of individuals.

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions ordinarily results in a:

"Partnership property" is the sum of the partnership's assets,including all property acquired by a partnership.

Partners may elect whether or not the partnership will be taxed as a separate entity.

To be partnership property,title to real estate bought with partnership assets and used by the partnership may be put in the name of:

A general partnership is formed without any formality and no documents need be filed with the state.

Some states allow the formation of partnerships in which all partners have limited liability.

A partnership agreement should include all but which one of the following?

Each partner,unless otherwise agreed,has equal rights in the management and conduct of the business of a general or a limited partnership.

The RUPA cannot be modified by agreement of the partners to a partnership.Its provisions must be strictly followed in any partnership agreement.

Under the RUPA,a partner is a co-owner of partnership property.

The law establishes a test for determining whether a partnership has been formed.The test includes which of the following?

Introduction to Law

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Intentional Torts

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Relationship of Principal and Agent

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Operation and Dissolution of General Partnerships

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