Tag: elements of business

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Questions Related to elements of business

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

Upon dissolution of Firm, any sum contributed by Partners to make up deficiencies of Capital u/s 48, is considered as ___________.

  1. business of the Firm

  2. goodwill of the Firm

  3. liabilities of the Firm

  4. assets of the Firm.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under Section 48 of the Indian Partnership Act, contributions made by partners to cover capital deficiencies are treated as assets of the firm, which are then used to settle liabilities.

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

Arun paid a premium for entering into Partnership for a fixed term. The Firm is dissolved before the expiry of such term, due to difference of opinion between Partners. Here  _________.

  1. Arun is entitled to the return of the entire premium.

  2. Arun is not entitled to any return of premium.

  3. Arun is entitled to return of entire premium or pro-rata part thereof.

  4. Arun has to pay further premium.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If a partner pays a premium for a fixed-term partnership and it dissolves prematurely (not due to the partner's own misconduct), they are entitled to a refund of the premium or a proportional part of it.

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

A entered into partnership agreement with B, in which A makes an advance to the firm in addition of his capital to be contributed by him, after dissolution of firm _________.

  1. A is not entitled to claim interest on his advances.

  2. After dissolution of firm A's right is retained to his capital only not to advances.

  3. A will be entitled to interest till firm earn profits.

  4. A is entitled to claim interest till the date of dissolution.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Advances made by a partner to the firm are considered debts of the firm. Therefore, the partner is entitled to interest on these advances up to the date of dissolution.

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

A partner cannot demand his proportionate share of premium from other partners at the time of dissolution of firm  __________.

  1. when there is no provision regarding return of premium in partnership deed

  2. by death of any partner

  3. mainly due to the misconduct of partner paying premium

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

A partner cannot claim a refund of the premium if the dissolution is caused by their own misconduct, the death of a partner, or if the agreement specifically excludes such a refund.

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

After dissolution of a Firm, any Partner or his representative may restrain any other Partner or his representative from carrying on similar business in the Firm Name or by using Firm's Property for own benefit, until ___________.

  1. the affairs of the Firm are fully wound up.

  2. public notice of dissolution is given.

  3. dissolution deed is signed by all Partners.

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

Until the affairs of the firm are fully wound up, partners have the right to restrain others from using firm property or the firm name for personal gain to protect the remaining assets.

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

After dissolution, the Firm is not bound by the acts of a Partner who __________.

  1. was a Working Partner

  2. was a Sleeping Partner

  3. has been adjudicated insolvent.

  4. has transferred his interest.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Once a partner is adjudicated insolvent, they cease to be a partner, and the firm is no longer bound by their acts, as they lack the legal capacity to represent the firm.

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

The accounting rule in respect of loss arising due to insolvency of a Partner is dealt with in ________.

  1. Derry vs Peek

  2. Carlill vs Carbolic Smoke Ball Co.

  3. Gamer vs Murray

  4. Chinnaiah vs Ramaiya.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Garner vs Murray (misspelled as Gamer in option C) established the accounting rule for handling losses arising from a partner's insolvency. The case specifies that solvent partners bear such losses in their capital ratio, not profit-sharing ratio. The other cases (Derry vs Peek - contract law, Carlill vs Carbolic Smoke Ball Co. - offer and acceptance, Chinnaiah vs Ramaiya - Hindu law) are unrelated to partnership insolvency accounting.

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

Where a Partner's Capital Account has a debit balance and he is unable to bring in necessary cash to make up the deficiency, it is called ________.

  1. Loss on Dissolution of Firm

  2. Loss on Dissolution of Partnership

  3. Loss arising out of piecemeal distribution of assets

  4. Loss arising out of Partner's insolvency.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a partner's capital account shows a debit balance and they cannot contribute the necessary funds to cover it, the resulting loss is attributed to the insolvency of that partner.

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

On a dissolution of a firm the partners selling the goodwill of a firm cannot _____________.

  1. carry on a similar business

  2. compete with the business sold by the purchaser.

  3. represent themselves as carrying on old business.

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

Upon selling the goodwill of a firm, partners are restricted from representing themselves as carrying on the old business, as this would undermine the value of the goodwill sold to the purchaser.

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

The Loss arising out of Partners insolvency shall be borne by_________ according to Garner vs Murray case.

  1. all the Partners equally

  2. solvent Partners in Capital Ratio

  3. all the Partners in Profit and Loss Sharing Ratio

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

According to the rule in Garner vs Murray, the loss arising from a partner's insolvency is to be borne by the solvent partners in proportion to their capital contributions, not their profit-sharing ratio.