Arithmetic Study Resources for Competitive Exams

Arithmetic

Averages Mixtures & Alligation Partnerships Percentages Pipes & Cisterns Profit, Loss & Discount Ratio & Proportion Simple & Compound Interest Time & Work Time, Speed & Distance

Q. What is the primary disadvantage of a general partnership?

A. Limited access to capital
B. Unlimited personal liability for partners
C. Difficulty in decision-making
D. Lack of business continuity

Solution

The primary disadvantage of a general partnership is that partners have unlimited personal liability for business debts.

Correct Answer: B — Unlimited personal liability for partners

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Q. What is the role of a 'silent partner' in a partnership?

A. To manage the business actively
B. To provide capital without participating in management
C. To take on all liabilities
D. To make all strategic decisions

Solution

A silent partner provides capital to the partnership but does not take part in the day-to-day management of the business.

Correct Answer: B — To provide capital without participating in management

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Q. Which of the following best describes a limited partnership?

A. All partners have unlimited liability.
B. Only one partner has unlimited liability.
C. All partners are involved in management.
D. Partners share profits equally.

Solution

In a limited partnership, only one partner has unlimited liability while others have limited liability.

Correct Answer: B — Only one partner has unlimited liability.

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Q. Which of the following best describes the term 'limited partnership'?

A. A partnership where all partners have unlimited liability
B. A partnership with at least one general partner and one limited partner
C. A partnership that is formed for a specific project only
D. A partnership that does not require a formal agreement

Solution

A limited partnership consists of at least one general partner who has unlimited liability and one or more limited partners who have limited liability.

Correct Answer: B — A partnership with at least one general partner and one limited partner

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Q. Which of the following best describes the term 'partnership by estoppel'?

A. A partnership formed without a formal agreement
B. A partnership that is legally recognized despite not meeting all legal requirements
C. A partnership that is dissolved due to one partner's actions
D. A partnership that is formed only for tax benefits

Solution

Partnership by estoppel occurs when a person represents themselves as a partner, leading others to believe they are part of the partnership, thus creating legal recognition.

Correct Answer: B — A partnership that is legally recognized despite not meeting all legal requirements

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Q. Which of the following best describes the term 'silent partner' in a business partnership?

A. A partner who is actively involved in management
B. A partner who invests capital but does not participate in day-to-day operations
C. A partner who has no financial stake in the business
D. A partner who only provides advice

Solution

A silent partner invests capital but does not engage in the daily operations of the business.

Correct Answer: B — A partner who invests capital but does not participate in day-to-day operations

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Q. Which of the following is a common reason for partners to enter into a partnership?

A. To avoid paying taxes
B. To share risks and responsibilities
C. To limit their business exposure
D. To eliminate competition

Solution

Partners often enter into partnerships to share risks and responsibilities associated with running a business.

Correct Answer: B — To share risks and responsibilities

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Q. Which of the following is a disadvantage of partnerships?

A. Shared decision-making
B. Limited access to capital
C. Unlimited liability for all partners
D. Complex tax structure

Solution

Unlimited liability for all partners is a significant disadvantage, as partners can be personally responsible for business debts.

Correct Answer: C — Unlimited liability for all partners

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Q. Which of the following statements about partnerships is true?

A. All partners must have equal say in decisions
B. Partnerships are always limited liability
C. Partners can be held personally liable for business debts
D. Partnerships cannot have more than two partners

Solution

In a general partnership, partners can be held personally liable for the debts of the business.

Correct Answer: C — Partners can be held personally liable for business debts

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Arithmetic

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