Question

57. Lita and Linda are partners in a general partnership and have borrowed $10,000 from the bank to finance their start-up. How is their liability for the bank loan best characterized?
a.
limited liability
b.
joint liability
c.
proportional limited liability
d.
full and complete impunity
58. Which statement best describes how a partnership comes into existence?
a.
The partners must sign a written partnership agreement.
b.
The partners must register the partnership.
c.
Two or more people carry on business together with a view to profit.
d.
Two or more people purchase property together.
59. Ray and Mohammed are forming a general partnership but have not yet discussed how profits will be shared between them. Which statement best describes their legal situation?
a.
General partners are always required to share profits equally.
b.
They are automatically entitled to a share proportional their relative contributions to the capital of the partnership.
c.
They cannot have a partnership until they determined how profits will be shared.
d.
If they fail to agree, partnership legislation requires them to share profits equally.

67. The Partnership Act provides for the following rule: “all partners are to share equally in the capital and profits of the business and must contribute equally to the losses.” Which statement best exemplifies this rule?
a.
The losses are restricted to the capital investments made by each partner.
b.
This rule is optional and may be varied by written agreement.
c.
This rule is mandatory and cannot be modified by agreement.
d.
The rule applies only to limited liability partnerships.
68. What is a positive feature of carrying on business as a limited partnership?
a.
All partners are completely shielded from negligent or wrongful acts of partners.
b.
They can be used as an investment device.
c.
They can be created informally.
d.
All partners have the same rights

Answer 1

(57) . Lita & Linda have to share their liability in the proportion, This proportion is based on the partnership deed between them.If they don't have any point regarding this issue in their deed they need to liable in equal ratios. so proportional limited liability is the correct answer.

58. Answer is (c). Partnership is the result of a contract. it is an agreement between two or more persons. There must be two or more persons to form the partnership. it should be noted that sort of deal can be arise only from an agreement.The agreement between them is either written or oral.There is no rule it must be in writing.So when partner ship comes into existence is there must two or more people to carry the business together with sharing of profit.

59. Answer is (a). If partners have no discussion about sharing of profits in their deed they must have to share their profits in equal ratio.If they have to share in any other ration that point need to come under deed.

67. Answer is (a). As per partnership Act Losses are restricted to capital investments made by each partner. They don't bear the excess loss over capital.

68. Answer is (d). In partnership firm all partners have same rights.