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Q:
Emmy, Shane, and Rusty are partners of the firm Esha Associates. Rusty nonwrongfully dissociates himself from the partnership. Under these circumstances, Rusty will not be liable to the creditors for the liabilities incurred while he was partner only:
A. if all the partners consent to it.
B. if there is an agreement.
C. if there is a court order.
D. by novation.
Q:
Leonard, Ted, and Julius are partners at Jutle Associates. They signed a two year lease agreement with Property Company for business purposes. Five months into the new agreement, Leonard dissociates from the partnership. Under what circumstances will Leonard no longer be liable on the lease agreement?
A. Leonard gives proper notice to Property Company of his intent to dissociate from Jutle.
B. The three partners and Property Company enter into an appropriate novation agreement.
C. Leonard filed a Statement of Dissociation more than 90 days prior to leaving the partnership.
D. Property Company will not serve to relieve Leonard of liability under the lease agreement.
Q:
The Barrel & Wine partnership is being wound up and liquidated. Net assets are to be distributed according to which of the following order of priority?
A. First to creditors who are not partners, then to creditors who are partners
B. First to all creditors, then to partners as per their capital accounts
C. First to partners per their capital accounts, then to all creditors
D. First to partners who have made loans to the partnership, then to all other creditors
Q:
In limited liability partnership, most of the partners have liability for partnership obligations:
A. beyond the partnership assets.
B. up to the extent of the partnership assets.
C. as per the partnership rules & regulation.
D. as per the demand of the partner.
Q:
Which of the following is true about charging a partner's capital account during distribution?
A. Losses from sale of partnership assets during winding up are not charged against a partner's capital account.
B. Partners are given the gross amount existing in their capital accounts.
C. On account of negative balance in a partner's account, other partners are under no obligation to contribute to set off the shortage.
D. If partnership creditors cannot be paid from the partnership assets, the creditors may proceed against the partners' capital accounts.
Q:
If a partner fails to contribute the amount equal to her negative capital account balance, then it can be recovered:
A. from that partner's assets.
B. by obtaining an undertaking from that partner.
C. from the other partners.
D. by charging the creditor's account.
Q:
When the winding up partners disagree during the process:
A. majority partner approval is required for actions in the ordinary course of winding up.
B. unanimous partner approval is required for every decision.
C. unanimous partner approval is required for actions in the ordinary course of winding up.
D. majority partner approval is required for every decision.
Q:
Amos, Beverly, Carlos, and Dan were partners in a partnership in which the agreement states that the partnership will continue until 2010. Amos died in 2006. What vote of the remaining partners is necessary to continue operating the partnership business?
A. A simple majority vote
B. A two-thirds majority vote
C. A three-quarters majority vote
D. A unanimous vote
Q:
When proceeds from the sale of partnership assets are being distributed during winding up, which of the following is settled first?
A. Payment to partners to the extent of their capital contributions
B. Payment to creditors of the partnership
C. Payment to partners to the extent of their share of profits
D. Payment to creditors after charging the partners' shares of losses
Q:
Which of the following is an implied authority of a partner winding up the business of an accounting partnership?
A. Entering into new contracts made after the dissolution
B. Disposing of the partnership's excess supplies
C. Making a contract to audit the financial records of a new client
D. Borrowing money in the name of the partnership
Q:
Which of the following is true about partnership rules for mining partnerships?
A. Mining partnerships are easiest to dissolve.
B. The transferability of mining partnership interest is restricted.
C. A mining partner may sell his interest to another person.
D. The death of a mining partner affects a dissolution.
Q:
Which of the following is an apparent authority during winding up?
A. Providing a third party notification of the dissolution
B. Continue making new contracts with disregard to the third parties' awareness about the same
C. Conducting business the way it was before dissolution
D. Filing a Statement of Dissolution with the secretary of state
Q:
Which of the following is true about eliminating partners' apparent authority?
A. Eliminating the apparent authority is not a safe practice during winding up.
B. Apparent authority cannot be eliminated by merely informing the existing business clients.
C. Filing a Statement of Dissolution will increase the partners' apparent authority.
D. The partnership should post notice of the dissolution at its place of business to let third parties know.
Q:
Which of the following causes dissolution and winding up?
A. A partner's transfer of his transferable partnership interest
B. When the partnership has completed the undertaking for which it was created
C. A creditor's obtaining a charging order
D. The addition of a new partner to the partnership
Q:
Which of the following is true about the effect of partnership agreement?
A. The dissociations listed in the RUPA are merely default rules.
B. The partners cannot change the definition of wrongful dissociations.
C. Partners cannot require dissociation if a partner transfers his transferable partnership interest.
D. The effects of nonwrongful dissociation cannot be changed.
Q:
Which of the following is true about dissolution and winding up the partnership?
A. In liquidation, the assets may not be sold separately.
B. Winding up always requires the sale of assets.
C. During winding up, the partners continue as fiduciaries to each other.
D. Most firms provide the partners with the firms' assets rather than proceeds from the sale of the same.
Q:
What is the term for the orderly sale of the assets of the partnership as part of dissociation?
A. Winding up
B. Incorporation
C. Organizing
D. Foreclosure
Q:
To avoid winding up:
A. a unanimous vote of all partners, who have not wrongfully dissociated, is necessary to continue business.
B. two-thirds majority of partners wanting to continue business is necessary.
C. the court has to pass judgment to continue business.
D. the remaining partners must file a continuing statement with the public office.
Q:
Mr. Smith and Mr. Blue enter into a partnership at will in which each owns half of the business. Mr. Blue decides to leave the partnership. What should Mr. Blue be paid for leaving the business?
A. Mr. Blue should be paid half of the value of the business.
B. Mr. Blue should receive 15% of the value of the business for leaving agreement.
C. Mr. Blue receives 1/3 of the value of the business for leaving.
D. Mr. Blue receives nothing for his dissociation.
Q:
Which of the following is a consequence of wrongful dissociation?
A. The dissociated partner may demand dissolution of the partnership.
B. The partnership must terminate on grounds of wrongful dissociation.
C. The dissociated partner should contribute to performing the winding up.
D. The dissociated partner is not entitled to receive the buyout price until the term of the partnership has expired.
Q:
Which of the following causes dissociation?
A. A partner's transfer of his transferable partnership interest
B. A creditor's obtaining a charging order
C. A partner's wrongful conduct materially affecting the partnership business
D. The addition of a new partner to a partnership
Q:
Which of the following is a wrongful dissociation?
A. A partner retires at age 70 when the partnership agreement allows partners to retire at age 60.
B. A partner assigns his partnership assets to a personal creditor.
C. A judicial dissociation due to a partner's persistent and substantial use of partnership property for his own benefit.
D. Death of a partner.
Q:
Which of the following is true about a wrongfully dissociated partner?
A. He may perform the winding up.
B. He may demand the partnership be dissolved.
C. He is not entitled to the value of any of his partnership interest.
D. He is entitled to his share of the partnership interest; minus the damages he caused the partnership.
Q:
Which of the following causes a dissociation of a partnership?
A. Withdrawal of a partner from a partnership at will
B. Three partners disagreeing on a matter in the ordinary course of business
C. A partner being provided his partnership interest
D. Addition of a partner to the partnership
Q:
Hagus was a partner at Ace-Star General partnership. The partnership agreement stated that all partners would continue as partners until the year 2010. However, in 2006, Hagus was offered another business opportunity that was more attractive than remaining a partner with Ace-Star. Following this, he dissociated himself from Ace-Star. Which of the following is true with regard to this situation?
A. Hagus dissolved the Ace-Star General partnership.
B. Hagus used his power to dissociate to withdraw from the partnership.
C. Hagus eliminated his liability to the partnership obligations.
D. Hagus used his right to dissociate to withdraw from the partnership.
Q:
Anthony, a partner of a partnership firm, was convicted for rash driving. Following this, all other partners dissociated him from the partnership, as per the terms of the agreement. This is an example of _____ dissociation.
A. wrongful
B. nonwrongful
C. discriminatory
D. valid
Q:
What is the term for a dissociation that violates the partnership agreement?
A. Wrongful dissociation
B. Breach dissociation
C. Fraud dissociation
D. Agent dissociation
Q:
Which of the following is true about dissociation?
A. It is a partner's right to dissociate himself from the partnership.
B. A partner has the power to dissociate from the partnership at any time.
C. When a partner's dissociation violates the partnership agreement, it is nonwrongful dissociation.
D. Consequences of wrongful and nonwrongful dissociations are always the same.
Q:
Which of the following is a nonwrongful dissociation?
A. A partner's filing a bankruptcy petition
B. A partner's retirement at age 60 when the partnership agreement requires the partners to retire at age 70
C. A partner's willful and persistent breach of the partnership agreement
D. Death of a partner
Q:
A new partner to a LLP is liable only to the amount of capital invested in the business.
Q:
Mark, John, and Graham are partners. Mark voluntarily and nonwrongfully leaves the partnership. However, the partnership has a three-year lease with Green Real Estate Inc. So long as Mark leaves the partnership, he is no longer liable for the lease agreement.
Q:
A novation is said to take place when continuing partners release a dissociated partner from liability but creditors do not release him.
Q:
Under the RUPA, when the dissociated partner has not wrongfully dissociated and there is no partnership agreement on the issue, he should be paid within 120 days.
Q:
Under RUPA, a new partner just joining a partnership has no liability for past debts of the business.
Q:
Normally, the implied authority of a winding up partner includes no power to borrow money in the name of the partnership.
Q:
In the absence of a partnership agreement, the RUPA provides that any partner who has not wrongfully dissociated may perform the winding up.
Q:
Partners who wind up the business of a dissociated partnership have implied authority to sell all the assets of the partnership.
Q:
Termination occurs after all partnership assets have been distributed.
Q:
Only the dissociations listed in the RUPA are allowed.
Q:
Barks and Paws partnership is in the business of selling pit bull dogs. After operating the partnership for one year, the state outlawed the breeding and sales of pit bulls. Assuming this is the only activity of the partnership, dissolution of the partnership will be required.
Q:
The partnership rules of dissociation and dissolution apply to joint ventures.
Q:
A partner charged with winding up of the partnership has implied authority to take such appropriate actions necessary to accomplish the wind up.
Q:
Dissociation is the term for adding new members to an existing partnership.
Q:
An individual who leaves a partnership by nonwrongful dissociation is entitled to receive their value of the partnership.
Q:
A heated disagreement is grounds for dissociation of a partner with the business.
Q:
A & K Inc. obtains a charging order against Bob, a partner in Foter and Poter Partnership. Such an act will cause the partnership to dissociate.
Q:
Andrew, being a partner, has appointed a caretaker for his property. Therefore, he has committed a wrongful dissociation.
Q:
A partner has the power to dissociate a partnership at will at any time.
Q:
The death of a partner before the expiration of the term of a partnership is a nonwrongful dissociation.
Q:
Under what condition may a partner compete against the partnership business?
A. If the business is in the IT field
B. If all the partners have consented to the partner's activities
C. If the business is in a high demand field
D. If the partner pays a royalty to the partnership business
Q:
According to the RUPA, a partner:
A. is entitled to a salary or wages.
B. is entitled to compensation based upon his capital contribution.
C. is entitled to an equal share of the profits.
D. is entitled to compensation based on the amount of time he contributes to the business.
Q:
Gary and Felix are partners in a general partnership. Gary does 2/3rd of the partnership work, while Felix does 1/3rd of the work. Last year the partnership earned $300,000 in profits. Under the RUPA, how much of the $300,000 is Felix entitled to receive?
A. $200,000
B. $150,000
C. $100,000
D. $250,000
Q:
Mark and Bonnie are partners. Mark contributed $30,000 of capital to the partnership and Bonnie contributed $15,000. Mark does 70 percent of the partnership's work, while Bonnie does 30 percent. They agree that Mark will assume 60 percent of partnership losses and Bonnie 40 percent. They have not decided how to share profits. The partnership earns a profit of $90,000. What is Bonnie's share of the profits?
A. $45,000
B. $30,000
C. $27,000
D. $36,000
Q:
Partners are not liable to their partnership for losses resulting from:
A. gross negligence.
B. reckless conduct.
C. intentional violation of the law.
D. honest errors in judgment.
Q:
A partner of a firm that leases residential property to college students allows his daughter to live in a partnership-owned apartment. Based on this situation, this partner:
A. has a duty to relinquish his management rights for misusing partnership property.
B. has a duty to account for the use of partnership property.
C. has a duty to return the personal profits secured through this transaction.
D. has a right to be indemnified for payments made from his personal funds.
Q:
A partner uses her own truck to pick up some partnership supplies, which she pays for with her personal check. This partner has the right to be _____ for payments made from her personal funds.
A. indemnified
B. investigated
C. adjudicated
D. indentured
Q:
Tim is a partner at Starland Properties and gives one of Starland's customer lists to Sun Realty, the firm's leading competitor. In this situation, Tim has violated:
A. the duty to act with apparent authority.
B. the duty to indemnify partners.
C. the duty to account.
D. the duty to maintain confidentiality of partnership information.
Q:
Jim and Sarah establish a partnership business. Sarah ends up doing all the work related to the business even though they had agreed to split the labor. Jim may be in breach of his duty to what?
A. Duty to Serve
B. Duty to Have No Adverse Interest
C. Duty of Care
D. Duty to Make Profit
Q:
The _____ requires partners to undertake their share of responsibility for running the day-to-day operations of the partnership business.
A. duty to act within actual authority
B. duty to serve
C. duty of care
D. duty to account
Q:
Morgan is a silent partner at Mathers & Sons, a general partnership. Because he is only a silent partner, he does not have:
A. the duty to contribute capital to the firm.
B. the duty to serve in the day-to-day operations of the firm.
C. the same liability for partnership debts as other partners.
D. the duty to act within actual authority.
Q:
A partner in a partnership firm should make all attempts to take decisions that are in the best interest of the firm. This is related to the concept of _____.
A. duty to serve
B. duty to act within actual authority
C. duty of care
D. duty to account
Q:
In a partnership, partners may not compete against their own partnership unless:
A. they do not monetarily benefit from their competing venture.
B. they have been granted the apparent authority to do so.
C. they obtain consent from other partners.
D. they play the role of silent partners.
Q:
In a partnership agreement, partners are not criminally liable when a partner commits a crime in the course and scope of transacting partnership business, even if they knew of the partner's criminal tendencies and placed him or her in a position in which he or she could commit a crime.
Q:
LLP partners are personally liable for the actions of the business.
Q:
Lara is a partner at Matador Services, a management consulting firm. She makes an agreement with Regal InfoTech whereby Matador will provide management consulting services for $75,000 to Regal, on the condition that Regal pays her $5,000 personally. Which of the following is true of this situation?
A. Lara has placed her own interests above those of the partnership.
B. Lara has exceeded her actual authority.
C. Lara is competing against her partnership.
D. Lara has not exercised her duty to serve.
Q:
In a partnership, when a partner makes a secret profit through a business transaction, what is the remedy for such a breach?
A. Paying the other partners additional compensation
B. Hiring another individual to carry out the duties of the partner
C. Recovering the profits of the partner's competing venture
D. Returning the profit made in the transaction
Q:
In a partnership, some classes of partners may have greater voting rights than others.
Q:
Partners in a partnership cannot turn over sole authority to one partner to run the business.
Q:
The standards and principles of agency law's respondeat superior are applied in determining the liability of the partnership and of the other partners for the torts of a partner and other partnership employees.
Q:
A partnership and its partners are usually liable for a partner's intentional torts.
Q:
Any notice given to a partner is deemed to be a notice given to the partnership firm.
Q:
When partners disagree concerning an action to be taken in the ordinary course of business, the disagreement will be resolved only if all the partners agree.
Q:
A partnership will be bound by the legal admissions or representations of its partners.
Q:
In a partnership, each partner has limited personal liability to partnership creditors.
Q:
A partner's express and implied authority constitutes his or her apparent authority.
Q:
A partnership does not have the authority to ratify the unauthorized act of partners.
Q:
A partner in a trading partnership ordinarily has implied authority to borrow money for the partnership.
Q:
Silent partners have the duty to serve and bear the same liability for partnership debts as any other partner.
Q:
Partners have a right to be indemnified for expenditures they make for the partnership from their personal funds.
Q:
Under the Revised Uniform Partnership Act partners owe each other loyalty.