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, the firm's assets shall be first applied in paying the debts of the firm to third parties, shall thereafter he applied in __________.

  1. In paying the debts of the firm to third parties

  2. Payment of partners loan

  3. Payment of partners capital

  4. Distribution of surplus to partners in profit sharing ratio
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The statutory order for settling accounts is: first, pay third-party debts; second, pay partners' loans; third, pay partners' capital; and finally, distribute any remaining surplus.

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

Firm is automatically and compulsory dissolve, if _________.

  1. All partners, or all but one partner, of firm are declared insolvent

  2. Some event happens which makes it unlawful for business of the firm to be carried on or for the partners to carry it on in partnership

  3. (A) or (B)

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

Compulsory dissolution occurs if all or all but one partner are insolvent, or if an event makes the business unlawful. Both (A) and (B) are correct triggers.

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

Which of the following is prepared only at the time of dissolution of the firm?

  1. Revaluation Account

  2. Realization Account

  3. Profit & Loss Adjustment Account

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

A Realization Account is specifically prepared at the time of dissolution to determine the profit or loss on the sale of assets and settlement of liabilities.

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

In settling the accounts of a firm after dissolution, losses, including deficiencies of capital, shall be paid _________________.

  1. Out of profits

  2. Out of capital

  3. By the partners individually in the proportions in which they were entitled to share profits

  4. First out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The order for paying losses is: first from profits, then from capital, and finally by the partners individually in their profit-sharing ratio.

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

Which of the following is/are disabilities of unregistered firm?

  1. No suit between partners and firm

  2. No suit by firm on a third party

  3. No claim of set-off

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

Unregistered firms face several disabilities, including the inability to sue third parties, the inability of partners to sue the firm, and the inability to claim set-off.

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

In which of the following case there is no bar on the right of unregistered firm or any partner of its partner?

  1. A suit for the dissolution of a firm

  2. A suit for rendering of accounts of a dissolved firm

  3. A suit for realization of the property of a dissolved firm

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

Even if a firm is unregistered, the law allows partners to file suits for the dissolution of the firm, for rendering accounts of a dissolved firm, or for realizing the property of a dissolved firm.

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

In which of the following case Garner Vs Murray rule is NOT applicable?
$1$. Only one partner is solvent.
$2$. All partners are insolvent.
$3$. When partnership deed provides a specific method to be followed in case of insolvency of a partner
Select the correct answer from the options given.

  1. $1$ only
  2. $1$ & $2$ only
  3. $3$
  4. $1, 2$ & $3$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Garner vs Murray rule is not applicable if there is only one solvent partner, if all are insolvent, or if the partnership deed explicitly provides an alternative method for handling insolvency.

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

In order for a firm to successfully carry out price discrimination which of the following conditions must hold?
I. The fine should not face a downward sloping demand curve
II. The firm must have a market power
III. Buyers with differing demand must be separable.
IV. The firm must have motives beyond profit maximization.
V. The firm must able to prevent the re-sale of its product.

  1. I, III & V only

  2. III & IV only

  3. l & IV only

  4. II, III & V only
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

A partnership may be dissolved __________________.

  1. On death of partner

  2. On completion of work or venture

  3. On expiry of term

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Dissolution of partnership implies not only a complete closure or termination of partnership business but it also includes any change in the existing agreement among the partners due to a change in the number of partners. A partnership may be dissolved under following conditions:
a) on death of partner
b) On completion of work or venture
c) On expiry of term.
Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Which of the advantages of LLP states that one partner is not responsible or liable for another partners misconduct or negligence.

  1. Flexible agreement

  2. Separate legal entity

  3. Fewer compliance requirements

  4. Easy to wind-up
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Separate legal entity of LLP states that one partner is not responsible or liable for another partners misconduct or negligence. Limited Liability Partnership can be defined as form of partnership where the partner or investor's liability is limited to the amount invested in the company.