Law Legal Studies · Commerce Accountancy

Partnership and Business Law

1,007 Questions

Test your knowledge of partnership regulations and business law with these practice questions. The topics include the rights of minor partners, firm dissolution, retirement rules, and public notices. This material is crucial for law exams and legal studies.

Rights of minor partnersPublic notice requirementsFirm dissolution rulesPartner retirementHolding out partner principlePartnership deed provisions

Partnership and Business Law Questions

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Thus the partners of __________ firm get the benefit of lower assessment.

  1. registered partnership

  2. unregistered partnership

  3. HUF

  4. sole proprietorship
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Registered partnerships provide legal recognition and specific tax benefits under various jurisdictions, whereas unregistered firms lack these formal advantages. This is a standard concept in business law and taxation.

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Which property will be the property of a Firm?

  1. The movable and immovable property of the firm

  2. Property brought in by a partner and is vested in the firm.

  3. Property brought in by a partner and is being used in partnership firm.

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the Indian Partnership Act, property belonging to the firm includes all property and rights or interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, for the firm.

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Which of the following is/ are advantage of LLP?

  1. Restrictions as to maximum number of partners

  2. LLP and its partners are not distinct from each other

  3. Partners are not liable for act of other partners

  4. All of above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. In this form of partnership, the partners are not liable for the acts of other partners. 

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Which of the following is/ are advantage of LLP?

  1. Personal assets of the partners are liable in all cases

  2. Much more difficult to dissolve or wind-up

  3. No requirement to maintain statutory records excepts books of account

  4. All of above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. In this form of business, there is no requirement to maintain statutory records but books to accounts is compulsory. 

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Which of the following is not characteristic of LLP?

  1. A legal entity having perpetual succession, separate from its partners

  2. The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners

  3. Each partner is an equal member in a LLP company

  4. Easy to establish than sole proprietorship
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. The process of establishing LLP is just like a company which is very complicated. 

Multiple choice elements of accounts ledger and posting three column cash book three columnar cash book triple column cash book

In the absence of proper agreement, representative of the deceased partner is entitled to the Dead partner's share in the following items _______. 

  1. profits till date, goodwill, joint life policy, interest on capital, share in revalued assets and liabilities.

  2. capital, goodwill, joint life policy, interest on capital, share in revalued assets and liabilities.

  3. capital, profits till date, goodwill, interest on capital, share in revalued assets and liabilities.

  4. capital, profits till date, goodwill, joint life policy, share in revalued assets and liabilities.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In the absence of a specific agreement, the representative of a deceased partner is entitled to the capital balance, share of profits up to the date of death, share of goodwill, share in the joint life policy, and share in revalued assets and liabilities.

Multiple choice business organisation and correspondence sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Characteristics of sole proprietorship form of business is/are :
1. Single owner
2. Unlimited liability
3. Control by partner
4. No sharing of profit and loss

  1. 1 and 4 only

  2. 2, 3, 4

  3. 2 and 1 only

  4. 4, 2 and 1
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A sole proprietorship has a single owner (1), carries unlimited liability (2), and the owner keeps all profits and bears all losses (4). Control is held by the owner, not a partner (3).

Multiple choice business organisation and correspondence sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

In case of sole proprietorship there is a _____ between ________.

  1. Direct link; effort and reward

  2. Indirect link; Profit and loss

  3. Direct link; Profit and loss

  4. Indirect link; effort and reward
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a sole proprietorship, the owner is the sole recipient of profits and the sole bearer of losses. This creates a direct link between the effort put into the business and the resulting financial reward.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

If any one of the joint promisors makes a default in making contribution. How will it be settle down by other promisors?

  1. Representative of promisor will be liable to contribution

  2. Contribution will be dismissed automatically

  3. Representative of a promisor will be liable along with other joint promisors

  4. The remaining joint promisors will be liable to contribute
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In the case of joint promisors, if one defaults, the remaining joint promisors are liable to contribute to the performance of the contract.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

X, Y and Z are partners of software business jointly promise to pay Rs. 30,000 to A. Over a period of time Y became insolvent, but his assets are sufficient to pay 1/4th of his debts. Z is compelled to pay the whole.

  1. Z has to bear the entire amount of liability

  2. X has to bear the entire loss arising out of Y's insolvency

  3. X and Z have to bear equally, the loss arising out of Y's insolvency

  4. Z can recover back the entire amount from A.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When one joint promisor is insolvent, the loss arising from their insolvency must be shared equally by the remaining solvent joint promisors.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Where it is agreed that a partner will be paid a lump sum amount for dissolution of the payment is made by the firm, the payment is debited to ____________ .

  1. Realisation Account

  2. Concerned Partner's Capital Account

  3. All Partners' Capital Accounts

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The lump sum amount paid by the partner is an expense for the firm since it has to be returned to the partner later on. All expenses need to be debited to the realisation account at the time of dissolution, hence, the payment is debited to the Realisation account at the time of dissolution of the firm.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

At the time of dissolution of the firm, loan from partner is _________ .

  1. Transferred to Realisation Account

  2. Not transferred to Realisation Account

  3. Transferred to the Partner's Capital Account

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

not transferred to Realisation Account.

Realisation account is opened on the dissolution of a firm. It is prepared by -
1. Transferring all assets except cash or bank account to the debit side of the account.
2. Transferring all liabilities except partner's loan account and partner's capital account to the credit side of the account.
3. Amount realised on sale of assets is credited to the account.
4. Liabilities paid are debited to the account.
5. Expenses incurred on the firm on dissolution are debited.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Garner Vs. Murray rule applies in case of _________________.

  1. Admission of a partner

  2. Dissolution of a firm

  3. Retirement of a partner

  4. Death of a partner
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Garner vs. Murray rule is a legal precedent used in partnership accounting to determine how solvent partners should share the deficiency of an insolvent partner upon dissolution.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Dissolution of a firm means __________.

  1. Closing down the undertaking

  2. Suspending permanently the activities of a partnership business

  3. Complete breakdown of a partnership

  4. All of the Above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the provisions of the Indian Partnership Act, 1932, dissolution of a firm means closing down the undertaking, suspending permanently the activities of a partnership business or a complete breakdown of a partnership.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

The dissolution of partnership between all partners of a firm is called _________.

  1. The dissolution of the firm

  2. Compulsory dissolution

  3. Dissolution by notice

  4. Dissolution by government
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the provisions of the Indian Partnership Act, 1932, dissolution of a firm means closing down the undertaking, suspending permanently the activities of a partnership business or a complete breakdown of a partnership. Hence, the dissolution of partnership between all partners of a firm is called the dissolution of the firm.