Question 1

A partner has the power to dissociate a partnership even though she does not have the right.

Accepted Answer

A) True 
 B)False

Question 2

The Revised Uniform Partnership Act (RUPA) holds that property belongs to the partnership if it was transferred to:

Accepted Answer

A)  the partners in their individual capacities. 
B)  general partners only by a transfer document that specifically names the partnership indicating that partnership exists. 
C)  any partner by a transfer document indicating the partner's status as a partner or otherwise indicating that a partnership exists. 
D)  any partner by transfer document under the charging order. 
A)  the partners in their individual capacities. 
B)  general partners only by a transfer document that specifically names the partnership indicating that partnership exists. 
C)  any partner by a transfer document indicating the partner's status as a partner or otherwise indicating that a partnership exists. 
D)  any partner by transfer document under the charging order.

Question 3

If a partner continues a partnership beyond the originally agreed-on term, the partner has _____.

Accepted Answer

A)  an unconditional right 
B)  no right to continue 
C)  a right to continue until the firm is liquidated or a new partner joins the firm 
D)  a right to continue only if it is agreed upon by the majority of partners 
A)  an unconditional right 
B)  no right to continue 
C)  a right to continue until the firm is liquidated or a new partner joins the firm 
D)  a right to continue only if it is agreed upon by the majority of partners

Question 4

MNO was a partnership that contracted for and performed a variety of painting jobs. Before the partnership was dissolved, MNO had entered into a contract under which MNO was supposed to paint every room in the state capitol building. At the time of the partnership dissolution, MNO had not yet performed the work called for by this contract. If the partners involved in the winding up elect to perform the contract, they _____.

Accepted Answer

A)  have the authority to enter into new contracts with subcontractors, material suppliers, and workers 
B)  have no authority to enter into new contracts 
C)  cannot assign long-term contracts to other contractors 
D)  do not have the authority to enter into new contracts with subcontractors, material suppliers, and workers and hence cannot borrow money in order to complete these contracts 
A)  have the authority to enter into new contracts with subcontractors, material suppliers, and workers 
B)  have no authority to enter into new contracts 
C)  cannot assign long-term contracts to other contractors 
D)  do not have the authority to enter into new contracts with subcontractors, material suppliers, and workers and hence cannot borrow money in order to complete these contracts

Question 5

Which of the following is true of partnership property?

Accepted Answer

A)  The fact that property is used in the business makes it partnership property though it does not show in the account books. 
B)  Payment by the partnership of taxes or insurance on property is conclusive evidence that the property is owned by the partnership. 
C)  Any property acquired with partnership funds is partnership property even if a contrary intent is shown. 
D)  Partnership property includes all property that originally was contributed to the partnership as well as anything purchased then or later for the partnership. 
A)  The fact that property is used in the business makes it partnership property though it does not show in the account books. 
B)  Payment by the partnership of taxes or insurance on property is conclusive evidence that the property is owned by the partnership. 
C)  Any property acquired with partnership funds is partnership property even if a contrary intent is shown. 
D)  Partnership property includes all property that originally was contributed to the partnership as well as anything purchased then or later for the partnership.

Question 6

Dissociation refers to any change in the relationships among partners, such as one of their deaths.

Accepted Answer

A) True 
 B)False

Question 7

A partner who wrongfully dissociates loses the right to demand a dissolution and winding up of the partnership.

Accepted Answer

A) True 
 B)False

Question 8

A partner has express authority to do whatever he or she is authorized to do by:

Accepted Answer

A)  the written articles of partnership. 
B)  the written articles of incorporation. 
C)  customs and usages of a particular partnership. 
D)  customs and usages of similar businesses in a particular area. 
A)  the written articles of partnership. 
B)  the written articles of incorporation. 
C)  customs and usages of a particular partnership. 
D)  customs and usages of similar businesses in a particular area.

Question 9

If a partnership has been dissolved in violation of the partnership agreement, the _____.

Accepted Answer

A)  court, by itself, liquidates the assets of the business 
B)  court appoints a representative as receiver to wind up the business 
C)  remaining partners forfeit the right to wind up the business 
D)  innocent partners have the right to liquidate the partnership assets 
A)  court, by itself, liquidates the assets of the business 
B)  court appoints a representative as receiver to wind up the business 
C)  remaining partners forfeit the right to wind up the business 
D)  innocent partners have the right to liquidate the partnership assets

Question 10

_____ releases a partner from liability for having exceeded his or her authority and binds the partnership to the contract as if it had been authorized all along.

Accepted Answer

A)  Devolution 
B)  Emancipation 
C)  Rescission 
D)  Ratification 
A)  Devolution 
B)  Emancipation 
C)  Rescission 
D)  Ratification

Question 11

Charlene, Derwood, and Elwyn form a partnership. They make no express agreement concerning how profits are to be divided. Of the $30,000 initial capital of the firm, Charlene and Derwood each contributed $12,000. Elwyn contributed $6,000. The partnership had a profit of $15,000 during the first year of operation of the business. Given this information, Derwood's share of the profit will be _____.

Accepted Answer

A)  $5,000 
B)  $6,000 
C)  $10,000 
D)  $12,000 
A)  $5,000 
B)  $6,000 
C)  $10,000 
D)  $12,000

Question 12

Under the Revised Uniform Partnership Act (RUPA), the dissociation of a partner always causes a dissolution and winding up of the business of the partnership.

Accepted Answer

A) True 
 B)False

Question 13

After retiring from Jones Corp., a partnership founded by Megan Jones and other partners, Megan grew tired of staying at home and started visiting the firm's place of business. The other partners would introduce her to prospective customers as "My partner, Ms. Jones," or "Our partner, Ms. Jones." Megan did not bother to correct anybody about this. She was introduced in this manner to Tiffany, a new customer. Relying on the idea that Megan was a partner, Tiffany entered into a contract with Jones Corp. Which of the following statements is true of Megan if Jones Corp. does not fulfill its obligations?

Accepted Answer

A)  Megan will not be liable as she did not make any claims to partnership. 
B)  Megan will be liable because she failed to correct the statement when she was being introduced as a partner. 
C)  The partner who introduced Megan will be liable, but Megan will not be liable. 
D)  Megan will not be liable as she has withdrawn from the partnership agreement by retiring and she is no more an actual partner. 
A)  Megan will not be liable as she did not make any claims to partnership. 
B)  Megan will be liable because she failed to correct the statement when she was being introduced as a partner. 
C)  The partner who introduced Megan will be liable, but Megan will not be liable. 
D)  Megan will not be liable as she has withdrawn from the partnership agreement by retiring and she is no more an actual partner.

Question 14

A partner is not liable to the partnership for the value of partnership property that he or she uses for individual purposes.

Accepted Answer

A) True 
 B)False

Question 15

The partnership is liable for torts committed by any partner of the firm while engaged in partnership business under the doctrine of _____.

Accepted Answer

A)  estoppel 
B)  respondeat superior 
C)  caveat emptor 
D)  ultra vires 
A)  estoppel 
B)  respondeat superior 
C)  caveat emptor 
D)  ultra vires

Question 16

Which of the following is true of the liability to creditors in the process of continuation of a partnership?

Accepted Answer

A)  Withdrawing partners are liable for new obligations though they have given a notice of withdrawal. 
B)  New partners are liable for prior obligations only to extent of contribution unless they agree to greater liability. 
C)  Continuing partners are the only people liable for prior obligations. 
D)  Withdrawing partners are liable for prior obligations even though they are released by novation. 
A)  Withdrawing partners are liable for new obligations though they have given a notice of withdrawal. 
B)  New partners are liable for prior obligations only to extent of contribution unless they agree to greater liability. 
C)  Continuing partners are the only people liable for prior obligations. 
D)  Withdrawing partners are liable for prior obligations even though they are released by novation.

Question 17

A partnership agreement:

Accepted Answer

A)  in written form is highly mandatory. 
B)  in written form is needed if it creates a partnership in excess of one year. 
C)  can be modified only after the limited partners have consented to the modification, unless the agreement states otherwise. 
D)  normally does not state the salary or drawing accounts. 
A)  in written form is highly mandatory. 
B)  in written form is needed if it creates a partnership in excess of one year. 
C)  can be modified only after the limited partners have consented to the modification, unless the agreement states otherwise. 
D)  normally does not state the salary or drawing accounts.

Question 18

The Revised Uniform Partnership Act (RUPA) does not permit partnerships or corporations to qualify as "persons" that can form a partnership.

Accepted Answer

A) True 
 B)False

Question 19

The significant difference between a joint venture and partnership is that:

Accepted Answer

A)  joint venturers sometimes are held to have less implied and apparent authority than partners. 
B)  a joint venture relates to a continuing business, and a partnership relates to a single enterprise. 
C)  the requirement for joint ventures is more formal in comparison with partnership agreements. 
D)  joint ventures unlike partnership agreements come into existence only when there is an express contract. 
A)  joint venturers sometimes are held to have less implied and apparent authority than partners. 
B)  a joint venture relates to a continuing business, and a partnership relates to a single enterprise. 
C)  the requirement for joint ventures is more formal in comparison with partnership agreements. 
D)  joint ventures unlike partnership agreements come into existence only when there is an express contract.

Question 20

Which of the following is true of a partner's right to compensation?

Accepted Answer

A)  A partner is always entitled to salary or wages. 
B)  The partners may not agree that one or more of them is to be paid a salary, which will not be deducted at the end of the year from his or her profits. 
C)  Compensation is never presumed to be the partner's share of the profits. 
D)  The partners may agree that one or more of them is to be paid a salary in addition to sharing in profits. 
A)  A partner is always entitled to salary or wages. 
B)  The partners may not agree that one or more of them is to be paid a salary, which will not be deducted at the end of the year from his or her profits. 
C)  Compensation is never presumed to be the partner's share of the profits. 
D)  The partners may agree that one or more of them is to be paid a salary in addition to sharing in profits.

Exam 27: Partnerships

A partner has the power to dissociate a partnership even though she does not have the right.

The Revised Uniform Partnership Act (RUPA) holds that property belongs to the partnership if it was transferred to:

If a partner continues a partnership beyond the originally agreed-on term, the partner has _____.

Which of the following is true of partnership property?

Dissociation refers to any change in the relationships among partners, such as one of their deaths.

A partner who wrongfully dissociates loses the right to demand a dissolution and winding up of the partnership.

A partner has express authority to do whatever he or she is authorized to do by:

If a partnership has been dissolved in violation of the partnership agreement, the _____.

_____ releases a partner from liability for having exceeded his or her authority and binds the partnership to the contract as if it had been authorized all along.

Under the Revised Uniform Partnership Act (RUPA), the dissociation of a partner always causes a dissolution and winding up of the business of the partnership.

A partner is not liable to the partnership for the value of partnership property that he or she uses for individual purposes.

The partnership is liable for torts committed by any partner of the firm while engaged in partnership business under the doctrine of _____.

Which of the following is true of the liability to creditors in the process of continuation of a partnership?

A partnership agreement:

The Revised Uniform Partnership Act (RUPA) does not permit partnerships or corporations to qualify as "persons" that can form a partnership.

The significant difference between a joint venture and partnership is that:

Which of the following is true of a partner's right to compensation?

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