Q. If a partner wishes to leave the partnership, what is typically required?
A.
A unanimous decision from all partners
B.
A written notice to the remaining partners
C.
Immediate withdrawal without notice
D.
A financial penalty
Show solution
Solution
Typically, a partner must provide written notice to the remaining partners if they wish to leave.
Correct Answer: B — A written notice to the remaining partners
Learn More →
Q. If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agreed to split based on capital contribution?
A.
60% to A and 40% to B
B.
50% to A and 50% to B
C.
70% to A and 30% to B
D.
40% to A and 60% to B
Show solution
Solution
Profits should be divided in accordance with their capital contributions, hence 60% to A and 40% to B.
Correct Answer: A — 60% to A and 40% to B
Learn More →
Q. If Partner A contributes 60% of the capital and Partner B contributes 40%, how should profits be divided if they agree to split based on capital contribution?
A.
60% to A and 40% to B
B.
50% to A and 50% to B
C.
70% to A and 30% to B
D.
40% to A and 60% to B
Show solution
Solution
Profits should be divided in accordance with their capital contributions, which are 60% for A and 40% for B.
Correct Answer: A — 60% to A and 40% to B
Learn More →
Q. If two partners decide to share profits equally but one partner contributes more capital, what is the likely outcome?
A.
The partner with more capital will receive a larger share of profits
B.
The partners will renegotiate their profit-sharing agreement
C.
The partnership will dissolve
D.
The partner with less capital will receive a larger share of profits
Show solution
Solution
Typically, partners who contribute more capital may negotiate for a larger share of profits.
Correct Answer: B — The partners will renegotiate their profit-sharing agreement
Learn More →
Q. In a partnership agreement, which clause is essential to prevent disputes?
A.
Profit-sharing ratio
B.
Business location
C.
Partner's personal interests
D.
Market competition
Show solution
Solution
A clearly defined profit-sharing ratio is crucial to prevent disputes among partners.
Correct Answer: A — Profit-sharing ratio
Learn More →
Q. In a partnership, what does the term 'joint venture' refer to?
A.
A partnership formed for a specific project
B.
A permanent partnership with no end date
C.
A partnership that requires equal capital contribution
D.
A partnership that is limited to two partners only
Show solution
Solution
A joint venture is a partnership formed for a specific project or purpose, often with a defined time frame.
Correct Answer: A — A partnership formed for a specific project
Learn More →
Q. In a partnership, which of the following is NOT typically a reason for dissolution?
A.
Mutual agreement of partners
B.
Insolvency of one partner
C.
Change in business strategy
D.
Increase in profit margins
Show solution
Solution
Increase in profit margins is generally not a reason for dissolution; rather, it is a positive outcome.
Correct Answer: D — Increase in profit margins
Learn More →
Q. In the context of partnerships, what does the term 'buy-sell agreement' refer to?
A.
An agreement to sell the business to a third party
B.
A contract outlining how a partner's share can be sold or transferred
C.
An agreement to buy out a partner's share at market value
D.
A clause that allows partners to sell their shares freely
Show solution
Solution
A buy-sell agreement outlines the terms under which a partner's share can be sold or transferred.
Correct Answer: B — A contract outlining how a partner's share can be sold or transferred
Learn More →
Q. What is a key characteristic of a limited partnership?
A.
All partners have unlimited liability
B.
At least one partner has limited liability
C.
All partners are involved in management
D.
It requires a formal written agreement
Show solution
Solution
In a limited partnership, at least one partner has limited liability, while others may have unlimited liability.
Correct Answer: B — At least one partner has limited liability
Learn More →
Q. What is the primary advantage of forming a partnership over a sole proprietorship?
A.
Limited liability for all partners
B.
Increased capital and resources
C.
Simplicity in decision-making
D.
Complete control over business decisions
Show solution
Solution
Partnerships allow for increased capital and resources through contributions from multiple partners.
Correct Answer: B — Increased capital and resources
Learn More →
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
Show solution
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
Learn More →
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
Show solution
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
Learn More →
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.
Show solution
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.
Learn More →
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
Show solution
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
Learn More →
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
Show solution
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
Learn More →
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
Show solution
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
Learn More →
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
Show solution
Solution
Partners often enter into partnerships to share risks and responsibilities associated with running a business.
Correct Answer: B — To share risks and responsibilities
Learn More →
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
Show solution
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
Learn More →
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
Show solution
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
Learn More →
Showing 1 to 19 of 19 (1 Pages)
