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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 elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Which of the following statement is incorrect?

  1. Every partner must be just and faithful to other partners

  2. A partner is bound to keep and render true, proper and correct accounts of the partnership

  3. A partner can compete with the firm, without the consent of the other partners

  4. To carry on the business of the firm to the greatest common advantage
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A partner in a Partnership agreement of a firm can make secret profits without the consent of other partners only from some other business and not from the business of the partnership firm. Even the business should not compete with the business of the partnership firm. If the partner wants to carry on such a business then they can do so with the consent of all other partners. 

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

In the absence of an agreement to the contrary, every partner is bound to share losses ______________.

  1. Equally

  2. In proportion to capital

  3. In proportion to their private assets
  4. $50\%$ loss equally and balance $50\%$ in their capital ratio
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the Partnership Act 1932, every partner has an equal right to participate in the conduct and management of the business and has an equal share in the profit or loss of the firm, mentioned otherwise. 

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Property of the firm shall be held by use of the partners __________.

  1. Exclusively for business purposes

  2. For business purposes as well as private purposes of the partners

  3. For the private purposes of the partners

  4. For charitable purposes
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A partnership basically refers to the contract between two or more people who have agreed to carry on certain business in order to achieve common goals. In the absence of any partnership deed, all the property, rights and interest contribute by the individual partners, all the property acquired in the course of the business and the goodwill of the business is considered as the property of the firm. These properties should be used by all the partners exclusively for business purpose only.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

For loss caused to the firm by his fraud in the conduct of the business, every partner shall __________.

  1. Indemnify the firm

  2. Indemnify the other partner

  3. Indemnify all the retiring partners

  4. Indemnify only to working partners
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
According to the Partnership Act 1932, the liability of the partners are unlimited and they are bound to compensate with the loss of the firm that is caused by the fraud in the conduct of business.
Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Every partner is an agent of the firm and of other partners for __________________.

  1. The purpose of the management of the firm

  2. The purpose of other partners

  3. The purpose of liability to third parties

  4. The purpose of the business of the firm
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the Indian Partnership Act, the business of the firm is the scope within which a partner acts as an agent for the firm and other partners.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A partner who contributed capital in the Finn but does not actively participate in the working of the business is called ______________.

  1. Active Partner

  2. Sleeping Partner

  3. Sub-Partner

  4. Nominal Partner
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A partner who contributed capital in the Finn but does not actively participate in the working of the business is called sleeping partner. Sleeping partner does not get involved in the management of the business. Only capital is contributed by the sleeping partner in a partnership entity.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

A company created jointly by two or more companies for mutual advantage is called _____________.

  1. Consolidation

  2. Merger

  3. Joint Venture

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

Action or process of combining two or more companies into a single more effective or coherent whole known as consolidation.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Maximum number of partners in case of non-banking business is _____.

  1. 100

  2. 20

  3. 30

  4. 40
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the Companies Act, 2013, the maximum number of partners for a non-banking business is 100. This was an increase from the previous limit of 20 under the 1956 Act.

Multiple choice elements of accounts company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Which of the following statements is true in case of Joint Venture?

  1. The Joint Venture can be formed by a single person only.

  2. A legal deed should be drafted before forming Joint Venture.

  3. The profit is shared between the venturers in agreed ratio.

  4. Joint Venture follows going concern concept.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A joint venture is a business arrangement where two or more parties agree to pool their resources for a specific task, and they share the profits and losses according to a pre-agreed ratio.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Joint Venture A/c is ______________.

  1. Personal A/c

  2. Nominal A/c

  3. Suspense A/c

  4. Real A/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A joint venture is an arrangement in which two or more parties agree to pool their resources for the purpose of a specific task or transaction. 

In a joint venture, each of the members is responsible for profits, losses and costs associated with it.

It is a Nominal Account.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A partnership firm cannot become member of the company registered under Section 8 of the Companies Act, 2013.

  1. True

  2. False

  3. Partly true

  4. Partly false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A partnership firm is not a legal person and cannot be a member of a company. However, since a Section 8 company is a company, the general rule applies that a partnership firm cannot be a member in its own name.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A partnership firm cannot become member of the company registered under Section 8 of the Companies Act, 2013.

  1. True

  2. False

  3. Partly true

  4. Partly false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A partnership firm is a person in the eyes of the law and can become a member of a company, including a Section 8 company, provided it is registered as a partnership firm.

Multiple choice

Co-Owners of property w right of survivorship available to persons who are not husband and wife

  1. Right of Partition

  2. Joint Tenancy

  3. Partnership

  4. Right of Survivorship
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Joint tenancy is a form of co-ownership where two or more individuals own equal shares of a property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants. Tenancy by the entirety also has survivorship rights but is strictly reserved for married couples.

Multiple choice

Which of these does NOT describe confidentiality for a client?

  1. Discuss tax calculations with the client

  2. Discuss the tax implications of a client with your manager

  3. Discuss tax affairs of a client with your friend

  4. Leave tax papers in a locked cupboard at the end of the day
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Confidentiality requires protecting client information. Discussing a client's private tax affairs with a friend is a breach of professional confidentiality.