Q. Which of the following statements about partnerships is true?
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A.
All partners must have equal say in decisions
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B.
Partnerships are always limited liability
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C.
Partners can be held personally liable for business debts
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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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Q. Which of the following statements is true regarding simple and compound interest?
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A.
Simple interest is always greater than compound interest.
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B.
Compound interest is always greater than simple interest.
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C.
Both are equal after a certain time.
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D.
None of the above.
Solution
Compound interest will always be greater than simple interest for the same principal, rate, and time, except for the case of zero interest.
Correct Answer:
B
— Compound interest is always greater than simple interest.
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Q. Which of the following terms refers to a partner who is not involved in day-to-day operations but shares in the profits?
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A.
Active partner
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B.
Silent partner
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C.
General partner
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D.
Equity partner
Solution
A silent partner is one who does not participate in daily operations but is entitled to a share of the profits.
Correct Answer:
B
— Silent partner
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Q. Which of the following terms refers to the distribution of profits among partners?
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A.
Capital contribution
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B.
Profit sharing
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C.
Equity distribution
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D.
Revenue allocation
Solution
Profit sharing refers to the distribution of profits among partners based on the terms outlined in the partnership agreement.
Correct Answer:
B
— Profit sharing
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Q. Which of the following terms refers to the legal document outlining the terms of a partnership?
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A.
Partnership deed
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B.
Business charter
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C.
Operating agreement
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D.
Corporate bylaws
Solution
The legal document that outlines the terms of a partnership is known as the partnership deed.
Correct Answer:
A
— Partnership deed
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