Partnerships Self-Quiz

 

 

 

 

 

 

 

 
In resolving disputes over whether a business enterprise may be characterized as a partnership, a court will look to see whether the existing business relationship involves:
Choice 1 a sharing of profits
Choice 2 a sharing of losses
Choice 3 an equal right in management
Choice 4 all of the above
Earl owes the Circle Ranch (a partnership) $1,000. Earl agrees to pay the Ranch a percentage of his profits until the debt is paid. Because of this, the Ranch is Earl’s:
Choice 1 general partner
Choice 2 limited partner
Choice 3 creditor
Choice 4 none of the above
Fred and Barney are the only partners in a business. John obtains a judgment against the partnership. The liability of the partnership must first be paid out of assets owned:
Choice 1 by the partnership
Choice 2 jointly by Fred and Barney
Choice 3 separately by Fred or Barney
Choice 4 none of the above
Al and Betty agree while talking on the telephone to form a partnership. Their partnership agreement is legally binding:
Choice 1 only if it is reduced to writing
Choice 2 only if valid consideration is exchanged
Choice 3 without any further measures
Choice 4 none of the above
Hugh and Cray are partners. Without Hugh’s knowledge, Cray commits fraud on behalf of the partnership that results in default on 2 bank loans. Regarding the loans, Hugh is:
Choice 1 not responsible at all
Choice 2 not responsible unless he declares bankruptcy
Choice 3 responsible
Choice 4 none of the above
A decision by the members of a partnership to enter an entirely new business would probably have to be approved by;

Choice 1a majority of the partners
Choice 2 the managing partner
Choice 3 all of the partners
Choice 4 none of the above
Stacey, a partner in an architectural firm, owes $40,000 personally to several creditors. To satisfy these debts, the creditors may obtain a charging order entitling them to:
Choice 1 Stacey's interests in partnership property
Choice 2 Stacey's profits as a partner
Choice 3 both A and B
Choice 4 none of the above
Al and Ed are partners. Ed dies. Anita, Ed’s widow, files suit to get Ed’s desk and chair. The fact that these were purchased by the partnership will:
Choice 1 enable Al to defeat her claims
Choice 2 Al can win though he must account for Ed's share
Choice 3 not prevent Anita from taking possession
Choice 4 none of the above
In general, a partner who devotes his time and energy to partnership business will
Choice 1 not get compensation if the agreement is silent
Choice 2 be entitled to compensation even if agreement is silent
Choice 3 be entitled to compensation if an equity partner
Choice 4 none of the above
Erica is a partner in a firm and applies for a loan for the partnership without authorization from the other partners. If the bank knows Erica is not authorized then:
Choice 1 the partnership will be liable
Choice 2 Erica alone will be liable
Choice 3 Erica and the partnership will be jointly liable
Choice 4 Erica and the partnership will be jointly and severally liable
Ben is admitted to an existing partnership. Several debts and obligations incurred prior to the date of his admission become due. Ben is:
Choice 1 personally liable for the obligations
Choice 2 liable up to the amount of his capital contribution
Choice 3 not obligated under these debts
Choice 4 none of the above

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