Q. Which of the following is a common method for resolving disputes in partnerships?
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A.
Public litigation
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B.
Mediation or arbitration
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C.
Ignoring the issue
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D.
Dissolving the partnership immediately
Solution
Mediation or arbitration is a common method for resolving disputes in partnerships.
Correct Answer:
B
— Mediation or arbitration
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Q. Which of the following is a common reason for a partnership to fail? (2023)
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A.
Lack of a formal agreement
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B.
High levels of initial investment
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C.
Strong communication among partners
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D.
Shared vision for the business
Solution
A lack of a formal agreement can lead to misunderstandings and conflicts, often resulting in the failure of the partnership.
Correct Answer:
A
— Lack of a formal agreement
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Q. Which of the following is a common reason for conflicts in partnerships?
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A.
Clear communication
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B.
Shared goals
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C.
Differing visions for the business
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D.
Equal profit sharing
Solution
Conflicts often arise from differing visions for the business, which can lead to disagreements among partners.
Correct Answer:
C
— Differing visions for the business
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Q. Which of the following is a common reason for partners to enter into a partnership?
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A.
To avoid paying taxes
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B.
To share risks and responsibilities
-
C.
To limit their business exposure
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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 a partnership?
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A.
Shared profits among partners
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B.
Limited access to capital
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C.
Increased liability for partners
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D.
All of the above
Solution
All of the options listed are disadvantages of a partnership, including shared profits, limited access to capital, and increased liability.
Correct Answer:
D
— All of the above
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Q. Which of the following is a disadvantage of partnerships?
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A.
Shared decision-making
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B.
Limited access to capital
-
C.
Unlimited liability for all partners
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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 is a key characteristic of a general partnership?
-
A.
Limited liability for all partners
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B.
Equal management rights for all partners
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C.
No formal agreement required
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D.
Perpetual existence
Solution
In a general partnership, all partners typically have equal management rights unless otherwise agreed.
Correct Answer:
B
— Equal management rights for all partners
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Q. Which of the following statements about partnerships is FALSE? (2023)
-
A.
Partners share profits and losses.
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B.
All partners have equal say in business decisions.
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C.
Partnerships can be formed without a written agreement.
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D.
Partners are personally liable for business debts.
Solution
Not all partners have equal say; the partnership agreement can specify different levels of authority.
Correct Answer:
B
— All partners have equal say in business decisions.
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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
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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 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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