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Partnership and Business Law

1,019 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 business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

ABC & Co., a firm consists of three partners A, B and C having one-third share each in the firm. According to A and B, the activities of C are not in the interest of the partnership and thus want to expel C from the firm. Advise A and B whether they can do so ___________.

  1. Yes

  2. No

  3. A & B have to retire from the firm

  4. Yes, but subject to permission of C
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the Partnership Act 1932, the partners those are in agreement with the partnership deed can expel any partner with majority if the acts of the partners are not in the good faith of the business. Therefore, A and B can do so under partnership act 1932. 

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

Which of the following is not covered by the term "Property of the firm".

  1. Property and rights and interest in property originally brought into the stock of the firm

  2. Property acquired by or for the firm

  3. Goodwill of the business

  4. Property of the partners
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Property of the partners is not covered by the term "Property of the firm". Partners can carry on the business of partnership firm only with the properties which belongs to the firm and not with their personal property. Partners of the firm belongs to a  separate domain from the property of the partners,

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

If profit sharing ratio is not specified in the partnership deed, then the profit is shared ______.

  1. Equally

  2. According to the seniority of age

  3. According to capital contribution

  4. According to qualification.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If profit sharing ratio is not specified in the partnership deed, then the profit is shared equally. The partners can share profits in any agreed ration but in the absence of an agreement, they share the property equally, that means,the amount of the profit received by each of the partners will be equal.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

To constitute a partnership agreement, it _____________.

  1. Must be in writing

  2. Can be oral or written

  3. Either oral or written

  4. Only oral
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

To constitute a partnership agreement, it can be oral or written. In absence of partnership agreement, partners share the profits and losses equally. Partnership Agreement can be defined as a contract between two or more business partners that is used to establish the responsibilities, and profit and loss distribution in a partnership firm.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

Share in partnership can be transferred by consent of ______ the partners.

  1. All

  2. Majority

  3. No consent required

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

Share in partnership can be transferred by consent of all the partners. Partners are the agents of the partnership firm who all carry on the business related activities in a partnership entity. A partner does not have any right to sell the share in partnership without the consent of all the partners.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

What is a Partnership?

  1. An agreement between persons

  2. An association of person

  3. A body of individuals

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

Partnership is an agreement between persons. Partnership is an association of 2 or more individuals but not more than 20 who agree to share the profits of a lawful business which is managed and carried on either by all or by any, or some of them acting for all. 
Partnership can be defined as a type of unincorporated business organization  in which multiple individuals, called general partners, manage the business and are equally liable for its debts' other individuals called limited partners may invest but not be directly involved in management and are liable only to the extent of their investments.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

If profit sharing ratio is not specified in the partnership deed, then the profit is shared ________________.

  1. Equally

  2. According to the seniority of partners

  3. According to the capital contribution

  4. According to qualification.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If profit sharing ratio is not specified in the partnership deed, then the profit is shared equally. The partners can share profit in any ratio. But in the absence of an agreement, they share profits equally.

Multiple choice business organisation importance of management introduction and characteristics of management meaning, nature and importance of management basics of management

A firm business income is nil/negative. It shall still be allowed as deduction on account of remuneration to working partner to the maximum extent of _____________________________.

  1. Actual remuneration paid as specified in partnership deed

  2. Rs. 50, 000

  3. Nil

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

Under the Income Tax Act, if a firm has a loss or nil income, it is still allowed a deduction for remuneration to working partners up to a maximum of Rs. 50,000.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The business form(s) in which the owners is (are) personally liable is (are) _________.

  1. Partnership only

  2. Proprietorship only

  3. Corporation only

  4. Partnership and Proprietorship
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a sole proprietorship and a partnership, the owners have unlimited personal liability for the debts of the business. In contrast, a corporation is a separate legal entity where shareholders generally have limited liability.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Which one of the following is NOT a feature of sole proprietorship business?

  1. Easy Formation

  2. Easy Dissolution

  3. Unlimited Liability

  4. Separate Legal Entity
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Separate entity concept defines that the owner/proprietor and business are treated two separate legal entity in the eyes of law. Hence any contribution made by owner as part of capital is treated as liability in the business. 


In case of proprietorship, owner and business both are same as the proprietor is only the sole owner of the business. Hence separate legal entity concept does not applies in the proprietorship business. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The characteristic that is always present with joint venture is _____________.

  1. it has an end life

  2. there is no specific act for joint venture

  3. profit is ascertained only after the end of the specific venture

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

A joint venture is a business entity created by two or more parties generally to share the ownership to complete a specific task or venture. 

Joint venture is having a specific end life i.e. when the task is completed, the joint venture comes to an end. 
There is no specific act for joint venture as it is a kind of temporary partnership to conclude a specific task. Hence all applicable laws have to be followed.
Profit of joint venture is calculated only when the specific joint venture is completed. 

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Date of compulsory dissolution for Partnership firm is the ________.

  1. date of order of court

  2. date of applying for court

  3. date when firm closes its business

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Compulsory dissolution occurs by court order, and the date of the order is the effective date of dissolution.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

When firm is compulsory dissolved?

  1. All the partners are insolvent.

  2. Firms business become unlawful.

  3. All but not one become insolvent.

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

Compulsory dissolution occurs when the business becomes unlawful or when all partners (or all but one) become insolvent.