Quiz in Partnership

DE LA SALLE LIPA College of Business, Economics, Accountancy and Management Accountancy Department Second Semester – A.Y. 2012-2013 Accounting Review 2 Quiz VI – Partnership Law Name:____________________________________________________________________Date:___________________________ _ Section:__________________________________________________________________Score:___________________________ Direction: Read and solve the following problems. Write the letter of your best answer on the space provided before each number. Erasures are not allowed and considered wrong. ___1. The liability of the partners, including industrial partners for partnership contracts entered into in its name and for its account, when all partnership assets have been exhausted is a. Pro-rata b. Common c. Solidary d. Voluntary ___2. X Co., a partnership is compose of A (capitalist partner), B (capitalist partner) and C (industrial partner). If you were partner A, who between B and C would you have an insurable interest on, such that you may then insure him? a. No one, as there is merely a partnership contract among A, B and C. b. Both B and C, as they are his partners. c. Only C, as he is an industrial partner. d. Only B, as he is a capitalist partner. ___3. A limited partnership has A, as general partner, B as limited partner, and C, as industrial partner contributing P100,000, P50,000 and services, respectively. The partnership failed and after disposing all its assets to pay partnership debts, there still remains a note payable in the sum of P30,000. Against whom can the creditor demand payment? a. A – P30,000 B – P0 C – P0 c. A – P15,000 B – P7,500 C – P7,500 b. A – P15,000 B – P0 C – P15,000 d. A – P10,000 B – P10,000 C – P10,000 ___4. X, Y and Z form Y Partnership to engage to import-export business. The partners agreed that the profit will be divided on the following ratio: X-20%, Y-30%, Z-50%, but not agreement as to losses. After one year of operations, there was a loss of P10,000. How will you apportion this loss if the capital contributions are as follows: X – P20,000, Y – P15,000, Z – P5,000. a. According to their capital contribution. b. Equally among X, Y and Z. c. X – P2,000; Y – P3,000, Z – P5,000 d. A third party may be called to make the contribution. ___5. M, T and E decided to form a universal partnership of all present property. The contract of partnership was executed on October 10,2010 but they commenced business on October 18,2011. One of the following is not correct? a. If the partnership is for 15 years, but one of the partners withdraws from the partnership on the 12 th year, the firm is dissolved. b. The partnership began its existence on October 10,2010. c. If after the expiration of its term, the partners continue to transact business, the partnership is converted to a partnership at will. d. In the absence of any partnership agreement specifically covering the division of losses among the partners, they will be deemed to share the losses in accordance with their capital contributions. ___6. Partners A, B and C met a tragic accident. A and B instantly died on the spot, while C was brought to the hospital but died a few hours later. Who may wind-up partnership affairs? a. legal representative of A c. legal representative of C b. legal representative of B d. The court should appoint a liquidator ___7. A, B and C agreed to form Y partnership. It was orally agreed that A would contribute P20,000, B – P15,000 and C – P5,000. It was orally agreed that in the event the ventures proved to be a financial loss, all losses above the amounts of capital contributed would be assumed by A. There were no other express agreements. Under these circumstances, which of the following is correct? a. Profits are to be divided in accordance with the wish of A being the major contributor b. Profits are to be divided equally c. The partnership is a nullity because the agreement is not contained in a signed writing. d. Partnership is valid notwithstanding failure to put the agreement in public instrument. ___8. In the preceding question if after exhausting the partnership capital of P40,000, there is still liability to X in the amount of P40,000, the liability of the partners to X will be: a. A – P20,000; B – P15,000 and C – P5,000 b. A will shoulder all P40,000 because that was their agreement c. Another agreement will be executed as to who will answer losses d. All of them will be liable to X

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___9. Which of the following is true with respect to a limited partner? a. Must not own limited-partnership interests in other competing limited partnership b. Is automatically an agent of the partnership with apparent authority to bind the limited partnership in contract. c. Has no liability to creditors even if he takes part in the control of the business as long as he is held out as being a limited partner d. Should not contribute industry ___10. A, B, and C formed a Universal Partnership of profits. The partners contributed the following: A - 20 sewing machines B – 14 Furnitures and Fixtures C – 4-storey building The parties agreed that only the use and fruits of the objects contributed shall pertain to the partnership. Which of the following statements is true? a. The partnership upon delivery shall be the owner of the objects contributed. b. Upon dissolution, the objects shall be converted into cash and the proceeds shall be divided equally among the partners including the fruits. c. During the term of the partnership, the contributing partner remains to be the naked owner of the object contributed but upon dissolution all objects contributed are to be converted into cash and proceeds shall be divided equally among the partners. d. During the term of the partnership, the loss of the objects contributed shall be borne by the partner concerned. ___11. If a partner assigns his interest in the partnership to his personal creditor or to a third person for value, the assignee acquires the right to a. Demand an accounting of partnership affairs. b. Inspect the books and records of the partnership c. Receive the partner – assignor’s share of the profits d. Interfere in the management of the partnership ___12. Which of the following is a characteristic of partnership as a contract? a. Preparatory b. Formal c. Innominate d. Gratuitous ___13. S and G established a partnership contributing P200,000 each. F, a classmate allowed his name to be included in the firm name of the partnership. The partnership was insolvent and after exhausting all the remaining assets, there remains a liability to third persons amounting to P30,000. The creditors can compel a. Either S or G or F to pay the P30,000 liability c. S and G to pay P15,000 each b. Either S or G to pay the P30,000 liability d. S, G and F to pay P10,000 each ___14. Using the preceding number, If the partnership is solvent and there is a profit of P30,000, without any stipulation as regards to profit sharing, the participation of the partners on the profit will be a. Just and equitable share for F, and the remainder, equally between S and G. b. Equally P10,000 each among S, G and F c. Equally P15,000 each between S and G d. The court will intervene ___15. A limited partner who takes active participation in the management of the partnership shall become a. Managing partner c. Liable as a general partner b. General partner d. Ostensible partner ___16. The following are the rights of a partner, except a. Associate another person to his share c. Inspect and copy partnership book b. Admit another partner d. Ask dissolution of the firm at the proper time ___17. A partnership which comprises all that the partners may acquire by their work or industry during the existence of the partnership. a. Universal partnership of present property c. Particular partnership b. Universal partnership of profits d. General partnership ___18. The following are the effects of unlawful partnership, except a. The profits shall be confiscated in favor of the government b. The instruments or tools and proceeds of the crime shall be forfeited in favor the government c. The contribution of the partners shall be confiscated in favor of the government d. The contract is void ab initio and the partnership never existed in the eyes of the law ___19. Absent any contrary provisions in the agreement, under which of the following circumstance will limited partnership be dissolved? a. A limited partner dies and his estate is insolvent. b. A personal creditor of a general partner obtains a judgment against the general partner’s interest in the limited partnership. c. A general partner retires and all the remaining general partners do not consent to continue. d. A limited partner assigns his partnership interest to an outsider and the purchaser becomes a substituted limited partner.

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___20. A, B and C are partners contributing services, P20,000 and P40,000 respectively. The distribution of P80,000 profit shall be a. A – P20,000 B – P20,000 C – P40,000 b. A – P5,000 B – P25,000 C – P50,000 c. A – P32,000 B – P16,000 C – P32,000 d. A – P26,667 B – P26,667 – P26,667 ___21. Using the preceding number, if the P80,000 represents net assets, the distribution shall be a. A – P20,000 B – P20,000 C – P40,000 b. A – P5,000 B – P25,000 C – P50,000 c. A – P32,000 B – P16,000 C – P32,000 d. A – P26,667 B – P26,667 C – P26,667 ___22. A, B and C are partners contributing services, P40,000 and P80,000, respectively. The distribution of P60,000 loss shall be a. A – P15,000 B – P15,000 C – P30,000 b. A – P20,000 B – P20,000 C – P20,000 c. A – P0 B – P20,000 C – P40,000 d. A – P0 B – P30,000 C – P30,000 ___23. A limited partnership has A, as general partner, B as limited partner, and C as capitalist-industrial partner contributing P50,000; P50,000 and P50,000 and services respectively. The partnership failed and after disposing all its assets to pay partnership debts only P30,000 remains. The distribution shall be a. A – P10,000 B – P10,000 C – P10,000 b. A – P15,000 B – P15,000 C – P0 c. A – P15,000 B – P0 C – P15,000 d. A – P0 B – P30,000 C – P0 ___24. A and B are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership? a. There is a partnership because of the equal sharing of profits. b. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits. c. There is no partnership since in partnership division of profits is not always necessary among partners. d. There is partnership they being co-owners and co-possessors. ___25. A and B are partners in Ace partnership. While A was performing his duties as a partner in the conduct of the business, he negligently caused damage to X, a third person. Who shall be liable to X and in what capacity? a. Only the partnership shall be liable it being a juridical person separate and distinct from the partners. b. Only A shall be liable for he is the only one at fault. c. Both A and B shall be liable solidarily to X. d. A, B and the Partnership are all liable solidarily to X. ___26. Which of the following is not a prohibition on a limited partner? a. Surname of a limited partner may not appear in the partnership name b. Limited partner may not take part in the control of the business c. Limited partner may not contribute service d. Limited partner may not constitute his assignee as substituted limited partner ___27. A, B and C as partners in a partnership stipulated and mutually agreed that A shall not share in the profits and losses. Is the agreement valid as among the partners only and not against third persons? a. Yes because among the partners it is valid to exempt one from sharing in the profits and losses b. Yes valid as long as third persons are not prejudiced c. Not valid stipulation exempting a partner from sharing profit and losses d. Not valid as against third persons or partnership creditors ___28. I. A newly admitted partner shall be liable for the pre-existing obligations of the partnership at the time of his admission in favor of partnership creditors up to the extent of his capital contribution. II. An industrial partner shall not share in the losses and his share in the profits shall be just and equitable under the circumstances. a. False, True b. True, True c. True, False d. False, False ___29. Three of the following dissolves a partnership, except a. Partnership business has become unlawful c. Expulsion of a partner b. Death, Civil interdiction or insolvency of a partner d. Partnership business can only be carried at a loss

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___30. I. A partner who is liable to the partnership for damages due to his fault may claim compensation if through his extraordinary efforts in other activities of the partnership unusual profits have been realized. II. A partner shall become debtor of the partnership if he fails to deliver his promised contribution and shall be in delay from the time of a demand from the partnership. a. False, False b. True, True c. False, True d. True, False ___31. A contributed P1M, B contributed P1M, and C contributed services. They agreed to divide the profits and losses equally. In case of loss of P.3M, for how much, if any, is C liable? a. Nothing because an industrial partner is exempt from losses b. P.1M but with reimbursement from A and B equally c. A and B alone shall shoulder the loss at C’s option d. P.1M ___32. Supposed in the preceding case, there was not agreement as to profit-loss sharing, what will be the share of C in the profit? a. Equal to the share of A and B c. P1M b. Just and equitable under the circumstances d. Court to fix the price ___33. Based on the preceding number, what shall be his share in the loss? a. Equal to the shares of A and B c. P1M b. Just and Equitable under the circumstances d. None ___34. The receipt by a person of share of the profits of a business is prima facie evidence that he is a partner in the business and it is given: a. As payment of a debt by installment or otherwise b. As wages or rent c. As an annuity to a widow or representative of a deceased partner d. As his interest in the partnership ___35. There is partnership except a. Two or more parties consent to a contract, oral or written b. They give money, property or industry to a common fund c. There is division of profits and losses among themselves d. There is no fiduciary relationship ___36. If a partner is insolvent, the first order of preference in the distribution of his assets is a. Partner’s creditors b. Partner’s contribution to the partnership c. Separate creditors of the debtor d. Pro-rata between the separate creditors and partnership creditors ___37. A partnership which must be in public instrument to be valid is a. Contribution of immovables or real rights therein regardless of the value thereof b. Contribution is P3,000 or more of personal property c. General partnership d. Particular partnership ___38. Three of the following are property rights of a partner, except a. Right in specific partnership asset b. Right to participate in the management c. Right to demand formal accounting of partnership affairs d. Interest of the partner in the partnership ___39. One of the following is a cause for involuntary dissolution of the partnership a. Termination of the definite term of partnership b. Insolvency of a partner c. Express will of a partner in a partnership at will d. Expulsion of a partner for a cause stated in the articles of partnership ___40. The following are disqualified to form a universal partnership, except a. Brother and sister b. Husband and wife c. Those guilty of adultery or concubinage d. Those guilty of the same offense, of the partnership is entered into in consideration of the same. ___41. What best describes the nature of partnership contract? a. Consensual contract b. Real contract c. Innominate contract d. Accessory contract ___42. A partnership that has for its object determinate thing, their use or fruits or specific undertaking, or the exercise of a profession or vocation.

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a. Particular b. General c. Limited d. Universal ___43. This partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners a. General b. Limited c. Managing d. Silent ___44. The contributions of a limited partner may be a. Cash c. Services b. Property d. Both A and B ___45. This partner cannot engage in business for himself, unless the partnership expressly permits him to do so. a. Industrial b. General c. Limited d. Capitalist ___46. When the manner of partnership management has not been agreed upon, all the partners shall be considered a. Managers b. Agents c. Administrators d. Co-owners ___47. The nature of the partner’s liability with the partnership for everything chargeable to the partnership due to quasidelict or delict. a. Joint b. Indivisible c. Solidary d. None of the above ___48. It is the change in the relation of the partners caused by a partner ceasing to be associated with the carrying on of business. a. Winding – up b. Withdrawal c. Dissolution d. Termination of partnership ___49. Every contract of partnership having a capital of P3,000 or more, in money or property, shall appear in a public instrument, which must be recorded in the a. Office of Civil Registrar b. Securities and Exchange Commission c. Register of Deeds d. DTI ___50. Three lawyers formed a law partnership. The senior and well known partner died. Can they still continue using the name of such deceased partner? a. Yes since he was a partner. b. Yes as long as they will punt some mark in that name indicating that such partner is already deceased. c. No as the partnership has been dissolved. d. No as he is already excluded from the partnership ___51. Three of the following are rights of a partner, except a. Right to associate another to his share b. Right to admit another partner c. Right to inspect and copy partnership books d. Right to ask dissolution of the firm at the proper time ___52. One or more but less than all the partners have no authority to perform the following acts, except a. Do any act which would make it impossible to carry on the ordinary business of the partnership. b. Submit a partnership claim or liability to arbitration. c. Renounce a claim of the partnership. d. Convey partnership property in the ordinary course of partnership business. ___53. The remedy of capitalist partners against an industrial partner who engaged in a business for himself without the expressed permission from the partnership is a. To compel him to sell his interest to the said capitalist partners b. To exclude him from sharing in the profits of the partnership c. To remove him as manager if he is appointed as manager of the partnership d. To expel him from the partnership and claim for damages ___54. The following are the instances when a partnership is unlawful, except a. A partnership formed to furnish apartment houses which would be used for prostitution b. A partnership formed for the purpose of acquiring parcels of land c. A partnership formed for gambling purposes d. A partnership formed to create illegal monopolies or combinations in restraint of trade ___55. A, B and C are partners in CAB enterprises. Not having established yet their credit rating, the three partners requested D, a well known business man, to help them negotiate the loan, from E, a money lender. With the consent of A, B and C, D represented himself as a partner of CAB Enterprises. Thereafter, E granted a loan of P150,000 to CAB enterprises. What kind of partner is D? a. Managing partner b. Liquidating partner c. Ostensible partner d. Partner by estoppel

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