Question 1

Fact Pattern 36-1B 
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
-Refer to Fact Pattern 36-1B. The partners decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results in

Accepted Answer

A)  nothing with respect to the firm's existence. 
B)  the continuation of the firm's business. 
C)  the termination of the firm's legal existence. 
D)  the temporary suspension of the firm's business.

Question 2

Fact Pattern 36-1B 
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
-Refer to Fact Pattern 36-1B. Carlos' assignment of his interest in Eastside to Good Credit Corporation results in

Accepted Answer

A)  nothing with respect to Eastside's existence. 
B)  the automatic termination of Eastside's legal existence. 
C)  the immediate maturity of all of Eastside's debts. 
D)  the temporary suspension of Eastside's business.

Question 3

Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act

Accepted Answer

A)  in the absence of an express agreement. 
B)  in the absence of an implied agreement. 
C)  only in the presence of an express agreement. 
D)  under all circumstances.

Question 4

Gallop Western Ranch is a family limited liability partnership (FLLP). In an FLLP, all of the partners must be

Accepted Answer

A)  natural persons only. 
B)  natural persons or persons acting as fiduciaries for natural persons. 
C)  persons acting as fiduciaries for natural persons only. 
D)  related.

Question 5

Genetic Innovations, LP, is a limited partnership. The partners sign an agreement purporting to state how the firm's profits and losses are to be di?vided. The profits and losses of the firm will be divided

Accepted Answer

A)  according to the agreement. 
B)  equally, despite the agreement. 
C)  in proportion to capital contributions, despite the agreement. 
D)  in proportion to each partner's participation in the firm's manage?ment, despite the agreement.

Question 6

An association cannot be a partnership without an express agreement.

Accepted Answer

A) True 
 B)False

Question 7

Fact Pattern 36-2A 
Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm.
-Refer to Fact Pattern 36-2A. Hal signs a contract with Lycra Chips, a retail component supplier, allegedly on Kappa's behalf. The contract is binding on

Accepted Answer

A)  Hal, Ira, Jill, and Kappa. 
B)  Hal only. 
C)  Kappa only. 
D)  no one.

Question 8

Dave and Eiger are partners in First-Place Athletic Supplies, which sells sports equipment. Dave manages the business. Unless the partnership agreement states otherwise, Dave is

Accepted Answer

A)  entitled to compensation in proportion to its effect on the business. 
B)  entitled to compensation in proportion to the effort expended. 
C)  entitled to compensation in proportion to the effort required. 
D)  not entitled to compensation for his effort.

Question 9

Sally and Tom decide to go into business, selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties, but the agreement says nothing about the management of the firm or a division of profits. Without Sally's knowledge, Tom tells United Computer Products, Inc., that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy. In the first year, e-Buy makes a profit of $50,000. What are the partners' rights with respect to the management of the firm? Is the partnership bound to the contract with United? Do the partners split the first year's profits? If so, how much is each entitled to?

Accepted Answer

The answer of Sally and Tom decide to go into...

Question 10

General principles of agency law pertain to a partner's authority to bind a part?nership in contract.

Accepted Answer

A) True 
 B)False

Question 11

Fact Pattern 36-1A 
Dean starts up E-Sites, an Internet service, and leases office space in a building owned by Fred. The lease requires Dean to pay Fred a base rental of $250, plus 10 percent of E-Sites' profits, each month. The term is two years. Dean hires Gina to work at E-Sites' tech support desk at an hourly wage of $9.00, plus a commis?sion of 10 percent of the prof?its. The term is also two years.
-Refer to Fact Pattern 36-1A. Dean and Gina are

Accepted Answer

A)  not partners, because Gina does not have an ownership interest or manage?ment rights in E-Sites. 
B)  not partners, because the pay includes an hourly wage. 
C)  not partners, because the pay includes only 10 percent of the profits. 
D)  partners in a partnership for two years.

Question 12

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts

Accepted Answer

A)  in proportion to the number of partners in the firm. 
B)  to no extent. 
C)  to the extent of her capital contribution. 
D)  to the full extent.

Question 13

In winding up a partnership, partners can create new obligations on be?half of the partnership.

Accepted Answer

A) True 
 B)False

Question 14

The maximum amount of money at risk by a limited partner is the amount of his or her investment in the limited partnership.

Accepted Answer

A) True 
 B)False

Question 15

Cody is a partner in Delta Accounting Service. Cody can inspect

Accepted Answer

A)  all of Delta's books and records. 
B)  Delta's books and records only as the firm's management permits. 
C)  Delta's books and records only for a reasonable purpose. 
D)  Delta's books and records relating to Cody's capital contribution only.

Question 16

Fact Pattern 36-1B 
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
-Refer to Fact Pattern 36-1B. Brad's dissociation from the firm results in

Accepted Answer

A)  the automatic termination of the firm's legal existence. 
B)  the partnership's buyout of Brad's interest in the firm. 
C)  the immediate maturity of all partnership debts. 
D)  the temporary suspension of the partnership's business.

Question 17

On a partner's dissociation, his or her interest in the partnership must be purchased.

Accepted Answer

A) True 
 B)False

Question 18

Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as

Accepted Answer

A)  an aggregate of the individual partners. 
B)  a natural person. 
C)  an entity. 
D)  a non-existent party.

Question 19

Trina and Uri do business as Value Gems. In acting on the firm's behalf in a deal with World Diamond Exchange, Trina recklessly exceeds what Value Gems can afford to pay, causing damage to the firm. Trina is

Accepted Answer

A)  liable for breach of the duty of care. 
B)  liable for breach of the duty of economic sense. 
C)  liable for breach of the duty of loyalty. 
D)  not liable.

Question 20

Pat and Quint sign a five-year partnership agreement to do business as "Pat's Landscaping Service." At the end of the fifth year, they decide to continue without specifying a new term. This partnership is terminable

Accepted Answer

A)  at any time by either partner. 
B)  only after an additional five-year term. 
C)  only if Pat dissociates from the firm. 
D)  only if Quint dissociates from the firm.

Exam 36: Partnerships and Limited Liability Partnerships

Fact Pattern 36-1B Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. -Refer to Fact Pattern 36-1B. The partners decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results in

Fact Pattern 36-1B Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. -Refer to Fact Pattern 36-1B. Carlos' assignment of his interest in Eastside to Good Credit Corporation results in

Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act

Gallop Western Ranch is a family limited liability partnership (FLLP) . In an FLLP, all of the partners must be

Genetic Innovations, LP, is a limited partnership. The partners sign an agreement purporting to state how the firm's profits and losses are to be di?vided. The profits and losses of the firm will be divided

An association cannot be a partnership without an express agreement.

Fact Pattern 36-2A Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm. -Refer to Fact Pattern 36-2A. Hal signs a contract with Lycra Chips, a retail component supplier, allegedly on Kappa's behalf. The contract is binding on

Dave and Eiger are partners in First-Place Athletic Supplies, which sells sports equipment. Dave manages the business. Unless the partnership agreement states otherwise, Dave is

General principles of agency law pertain to a partner's authority to bind a part?nership in contract.

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts

In winding up a partnership, partners can create new obligations on be?half of the partnership.

The maximum amount of money at risk by a limited partner is the amount of his or her investment in the limited partnership.

Cody is a partner in Delta Accounting Service. Cody can inspect

Fact Pattern 36-1B Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. -Refer to Fact Pattern 36-1B. Brad's dissociation from the firm results in

On a partner's dissociation, his or her interest in the partnership must be purchased.

Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as

Trina and Uri do business as Value Gems. In acting on the firm's behalf in a deal with World Diamond Exchange, Trina recklessly exceeds what Value Gems can afford to pay, causing damage to the firm. Trina is

Pat and Quint sign a five-year partnership agreement to do business as "Pat's Landscaping Service." At the end of the fifth year, they decide to continue without specifying a new term. This partnership is terminable