Question 1

Which of the following is true regarding the implied authority of partners?

Accepted Answer

A)   Partners generally have greater implied authority than typical agents.
B)   The implied authority of partners is usually determined by the nature of the business.
C)   A partner does not have implied authority to sell any partnership property without the consent of all other partners.
D)   Partners generally have greater implied authority than typical agents, the implied authority of partners is usually determined by the nature of the business, and a partner does not have implied authority to sell any partnership property without the consent of all other partners.
E)   The implied authority of partners is usually determined by the nature of the business, and a partner does not have implied authority to sell any partnership property without the consent of all other partners, but partners have less authority than typical agents.F) None of the above
G) A) and B)

Question 2

Which of the following does the duty of obedience that one partner owes to another reference?

Accepted Answer

A)   The duty to obey instructions of any other partner.
B)   The duty to keep other partners informed of the finances of the partnership.
C)   The duty to keep other partners informed of partnership debts.
D)   The duty to obey the partnership agreement.
E)   The duty to reimburse the partnership for any personal expenditures.F) C) and D)
G) B) and D)

Question 3

During the winding-up process, the partners may not engage in a business that competes with the partnership business.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is defined as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on, as distinguished from the winding up, of the business?

Accepted Answer

A)   Resolution
B)   Dissolution
C)   Resignation
D)   Suspension
E)   TransformationF) C) and D)
G) B) and C)

Question 5

Which of the following is true regarding silent partnerships in Germany?

Accepted Answer

A)   They are illegal.
B)   They are legal, but a silent partner is liable for any judgment entered against any other party; and the silent partner's identity must be revealed upon entry of judgment.
C)   They are legal, and the silent partner is not held personally liable for damages incurred in the course of business.
D)   They are legal, and the identity of the silent partner may remain secret so long as sufficient funds are placed in trust to cover any expected judgment against any partner involved.
E)   They are legal, and the identity of the silent partner may remain secret so long as insurance is obtained to cover any expected judgment against any partner involved.F) A) and B)
G) C) and E)

Question 6

Which of the following is an association of two or more persons to carry on as co-owners a business for profit?

Accepted Answer

A)   A joint operation
B)   A combined partnership
C)   A partnership
D)   A joint business arrangement
E)   A primary partnershipF) C) and D)
G) C) and E)

Question 7

Which of the following is false regarding duties of partners to one another?

Accepted Answer

A)   They have a duty to be loyal to one another.
B)   They have a fiduciary duty to one another.
C)   They should not take any kind of action that will undermine the partnership.
D)   They may engage in a competing business only if the competing business does not result in significant losses to the partnership.
E)   They must disclose any material facts affecting the business to one another.F) C) and E)
G) B) and C)

Question 8

Reference - Partnership Disruption. Bruce, Sandra, and Minnie want to form a partnership to assist students with resume preparation and employment searches. Bruce asks Sandra and Minnie if they should draw up some sort of agreement. Sandra replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Bruce and Minnie, however, Sandra agreed to a written agreement. Sandra has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership. She keeps the funds she receives for herself. When Bruce and Minnie found out, Sandra replied that she was doing two-thirds of the partnership work; that she, therefore, had a majority of the voting rights; and that her actions were appropriate. The articles of partnership did not address the right to share in management, but Bruce and Minnie strongly disagreed with Sandra. Which of the following is true regarding Sandra's statement that a written agreement is not necessary to set up a partnership?

Accepted Answer

A)   She is correct.
B)   She is correct but only because only three members are involved.
C)   She is incorrect but only because fewer than five members are involved.
D)   She is correct only if all partners have at least a college degree.
E)   She is incorrect only if none of the partners have experience with the partnership form of business.F) A) and B)
G) D) and E)

Question 9

Which of the following is true regarding the right of a partner's personal creditor to seize specific items of partnership property?

Accepted Answer

A)   A creditor may do so only after giving all partners at least 90 days advance notice.
B)   A creditor may do so only after giving all partners at least 60 days advance notice.
C)   A creditor may do so only after giving all partners at least 30 days advance notice.
D)   A creditor may seize specific items of partnership property only if the items are located in the office of the creditor involved.
E)   A partner's personal creditor may not seize specific items of partnership property.F) All of the above
G) C) and D)

Question 10

Which of the following is true regarding the rights of general partners and limited partners?

Accepted Answer

A)   A general partner has limited personal liability for the debts of the partnership.
B)   The general partner typically has exclusive control and management of the limited partnership.
C)   Limited partners have no right to an account of the partnership.
D)   A general partner may add additional partners without the consent of limited partners.
E)   General partners always recover their investment before limited partners.F) C) and D)
G) A) and D)

Question 11

Which of the following is an agreement stating that continuing partners can keep partnership property and carry on the partnership business?

Accepted Answer

A)   A continuation agreement
B)   A limitation agreement
C)   A proceeding agreement
D)   A forward agreement
E)   A non-liquidation agreementF) B) and E)
G) B) and D)

Question 12

Which of the following terms is used when a partner dissolves a partnership in violation of the partnership agreement?

Accepted Answer

A)   Wrongful termination
B)   Untimely termination
C)   Wrongful dissolution
D)   Prohibited termination
E)   Prohibited dissolutionF) B) and C)
G) C) and E)

Question 13

Set forth the order the Uniform Partnership Act establishes for the distribution of liquidated assets when a partnership is dissolved and has debt.

Accepted Answer

The Uniform Partnership Act establishes ...

Question 14

Reference - Big Spender. Wally was a partner in XYZ law firm. He decided to withdraw from the partnership because he wanted to retire early somewhere in the Caribbean. The partnership agreement of XYZ law firm did not specify the objective or duration of the partnership. Although Wally gave proper notice prior to his withdrawal and the dissolution of the partnership, the other partners claimed that he acted illegally. Wally was angry and decided to get even. He went to the office supply store at which he typically purchased supplies on account for the firm. He purchased several cameras, a computer, and other items which he placed on the firm account. Wally just smiled when Sam, the manager at the store, told Wally that he really appreciated the law firm's business. The next day Wally headed for the Caribbean and cannot be located. Sam later requests that XYZ firm pay the bill for Wally's purchases. The law firm, whose members had decided to continue the partnership after the dissolution resulting from Wally's resignation, refused on the basis that Wally was not a partner when the purchases were made. Sam says that he thought Wally was a partner and that he expects to be paid immediately. Which of the following is true regarding whether the law firm is liable for purchases made by Wally?

Accepted Answer

A)   The law firm is liable for the purchases because it had not provided notification to the office supply that Wally was no longer authorized to make purchases for the firm.
B)   The law firm is liable for the purchases because Wally's authority continued for seven days after his resignation.
C)   The law firm is liable for the purchases because Wally's authority continued for ten days after his resignation.
D)   The law firm is liable for the purchases only if Wally was treated inequitably during the winding-up process.
E)   The law firm is liable for the purchases only if Wally cannot be found within one year of the date the purchases were made.F) All of the above
G) A) and B)

Question 15

Which of the following was the result on appeal in Eric Johnson & Lori Johnson v. St. Therese Medical Center, the case in the text in which partners of a physician found liable for negligence resisted payment of the judgment?

Accepted Answer

A)   That the partners of the physician were not personally liable for the judgment because only the partnership was sued; and the individual partners did not, therefore, receive due process because they were not provided notice that their personal assets were at risk.
B)   That the individual physicians were not liable because although they were sued in their individual capacities, the partnership itself was also sued and found liable; and the plaintiffs had acted unreasonably in failing to pursue assets of the partnership.
C)   That the individual physicians, who were sued in their individual capacities, were not personally liable because insufficient evidence was presented of the partnership's insolvency.
D)   That the individual physicians, who were sued in their individual capacities, were not personally liable because insufficient evidence was presented of the insolvency of the partner who committed the malpractice.
E)   That the individual physicians were liable in their individual capacities.F) A) and C)
G) D) and E)

Question 16

Reference - Parent Involvement. Marcy and George, both artists, discussed forming a partnership to paint portraits. George's parents were interested in investing in the partnership, but they wanted to avoid any liability. George suggested forming a limited partnership. He told Marcy and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. Although George protested strongly on the basis that it was a waster of money, Marcy insisted that a certificate of limited partnership be filed with the secretary of state. After a few months, Marcy and George decided that they wanted to add a new partner, Betty, to the partnership as a general partner. Betty had some expertise in the portrait field but, unfortunately, she had also had some scrapes with local law enforcement. George's parents objected strenuously to the admission of Betty. Marcy and George took the position that the parents, as limited parents, had no say in the admission of a new partner. George's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability. Which of the following is true regarding the issue of George's father deciding to manage the partnership?

Accepted Answer

A)   Before he can undertake management duties, he must get the approval of at least one half of all general and limited partners.
B)   There is no effect on the partnership agreement.
C)   He may be involved in all matters of management except strategic planning.
D)   He may be involved in management; but, as a limited partner, he may not be paid additional amounts for doing so.
E)   As a limited partner, he may not be involved in management and retain limited liability.F) A) and C)
G) A) and D)

Question 17

Reference - Big Spender. Wally was a partner in XYZ law firm. He decided to withdraw from the partnership because he wanted to retire early somewhere in the Caribbean. The partnership agreement of XYZ law firm did not specify the objective or duration of the partnership. Although Wally gave proper notice prior to his withdrawal and the dissolution of the partnership, the other partners claimed that he acted illegally. Wally was angry and decided to get even. He went to the office supply store at which he typically purchased supplies on account for the firm. He purchased several cameras, a computer, and other items which he placed on the firm account. Wally just smiled when Sam, the manager at the store, told Wally that he really appreciated the law firm's business. The next day Wally headed for the Caribbean and cannot be located. Sam later requests that XYZ firm pay the bill for Wally's purchases. The law firm, whose members had decided to continue the partnership after the dissolution resulting from Wally's resignation, refused on the basis that Wally was not a partner when the purchases were made. Sam says that he thought Wally was a partner and that he expects to be paid immediately. Which of the following is true regarding whether Wally had actual authority to bind the partnership in regard to his purchases at the office supply store?

Accepted Answer

A)   Wally did not have actual authority to bind the partnership.
B)   Wally had actual authority to bind the partnership because the law firm had not notified anyone at the office supply that he was no longer authorized to make purchases for the law firm.
C)   Wally had actual authority to bind the partnership so long as the purchases were made within seven days of his resignation.
D)   Wally had actual authority to bind the partnership so long as the purchases were made within ten days of his resignation.
E)   Wally had actual authority to bind the partnership only if he cannot be found within one year of the date the purchases were made.F) C) and D)
G) B) and E)

Question 18

Reference - Fish Fiasco. Matt agreed to be a limited partner in Susie and Bill's business of importing tropical fish. Matt contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. Matt was paid nothing. When he inquired, Susie told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Susie and Bill asked Matt to contribute $20,000 to cover the debts. When Matt complained about the amount, Bill told him that he and Susie were being overly reasonable and that he was legally liable for an even larger percentage. In an attempt to keep the business afloat, Matt told Susie and Bill that they should consider suing a customer who had not paid a large account. Susie and Bill replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation. Assume that legally Matt has the rights and liabilities of a limited partner. Which of the following is true regarding any responsibility of Matt to share in losses?

Accepted Answer

A)   Matt assumed no liability for the partnership beyond the capital he invested.
B)   Matt has a legal obligation to share equally in losses with the general partners.
C)   Matt would be responsible for one-half of any losses with the two general partners having liability for the other half.
D)   Matt has no liability for losses at all.
E)   Matt has liability for losses only if the general partners are insolvent.F) A) and B)
G) B) and C)

Question 19

Unless otherwise stated in the partnership agreement, even if one partner has an unusually large proportion of the management duties, each partner will have one vote in determining how the partnership is managed.

Accepted Answer

A) True 
 B)False

Question 20

The implied authority of partners is determined by the partnership agreement.

Accepted Answer

A) True 
 B)False

Exam 21: Forms of Business Organization

Correct Answer
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Unless otherwise stated in the partnership agreement, even if one partner has an unusually large proportion of the management duties, each partner will have one vote in determining how the partnership is managed.

Correct Answer
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Correct Answer
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Correct Answer
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The implied authority of partners is determined by the partnership agreement.

Correct Answer
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Which of the following is true regarding the right of a partner's personal creditor to seize specific items of partnership property?

Correct Answer
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Which of the following is true regarding silent partnerships in Germany?

Correct Answer
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Which of the following is false regarding duties of partners to one another?

Correct Answer
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Which of the following is defined as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on, as distinguished from the winding up, of the business?

Correct Answer
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Which of the following is an association of two or more persons to carry on as co-owners a business for profit?

Correct Answer
verified

Correct Answer
verified

Which of the following was the result on appeal in Eric Johnson & Lori Johnson v. St. Therese Medical Center, the case in the text in which partners of a physician found liable for negligence resisted payment of the judgment?

Correct Answer
verified

Set forth the order the Uniform Partnership Act establishes for the distribution of liquidated assets when a partnership is dissolved and has debt.

Correct Answer
verified
The Uniform Partnership Act establishes ...
View Answer

Correct Answer
verified

Which of the following does the duty of obedience that one partner owes to another reference?

Correct Answer
verified

Which of the following is true regarding the rights of general partners and limited partners?

Correct Answer
verified

Which of the following is an agreement stating that continuing partners can keep partnership property and carry on the partnership business?

Correct Answer
verified

During the winding-up process, the partners may not engage in a business that competes with the partnership business.

Correct Answer
verified

Which of the following terms is used when a partner dissolves a partnership in violation of the partnership agreement?

Correct Answer
verified

Which of the following is true regarding the implied authority of partners?

Correct Answer
verified

Exam 21: Forms of Business Organization

Correct AnswerverifiedShow Answer

Unless otherwise stated in the partnership agreement, even if one partner has an unusually large proportion of the management duties, each partner will have one vote in determining how the partnership is managed.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The implied authority of partners is determined by the partnership agreement.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the right of a partner's personal creditor to seize specific items of partnership property?

Correct AnswerverifiedShow Answer

Which of the following is true regarding silent partnerships in Germany?

Correct AnswerverifiedShow Answer

Which of the following is false regarding duties of partners to one another?

Correct AnswerverifiedShow Answer

Which of the following is defined as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on, as distinguished from the winding up, of the business?

Correct AnswerverifiedShow Answer

Which of the following is an association of two or more persons to carry on as co-owners a business for profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in Eric Johnson & Lori Johnson v. St. Therese Medical Center, the case in the text in which partners of a physician found liable for negligence resisted payment of the judgment?

Correct AnswerverifiedShow Answer

Set forth the order the Uniform Partnership Act establishes for the distribution of liquidated assets when a partnership is dissolved and has debt.

Correct AnswerverifiedThe Uniform Partnership Act establishes ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following does the duty of obedience that one partner owes to another reference?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the rights of general partners and limited partners?

Correct AnswerverifiedShow Answer

Which of the following is an agreement stating that continuing partners can keep partnership property and carry on the partnership business?

Correct AnswerverifiedShow Answer

During the winding-up process, the partners may not engage in a business that competes with the partnership business.

Correct AnswerverifiedShow Answer

Which of the following terms is used when a partner dissolves a partnership in violation of the partnership agreement?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the implied authority of partners?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
The Uniform Partnership Act establishes ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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