Tag: elements of business

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

Identify the disadvantage of LLP.

  1. An LLP can be structured in such a way that one partner has more rights than another.

  2. An LLP is much easier and cheaper to run than a private limited company.

  3. The partners are free to draft the agreement as they please, with regard to their rights and duties.

  4. Non-compliance fines can escalate to Rs. 5 lakh for a single year.
Reveal answer Fill a bubble to check yourself
A,D Correct answer
Explanation

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. LLP combines the advantages of both the Company and Partnership into a single form of organization. Disadvantages of LLP are as follows:a) An LLP can be structured in such a way that one partner has more rights than another.

b) Non-compliance fines can escalate to Rs. 5 lakh for a single year.

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

The concept of _____ restricts the amount of money a person risks to what he invests in a business enterprise.

  1. Expert assistance

  2. Unlimited liability

  3. Separate legal existence

  4. Limited liability
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise. It means that the liability of each person is limited to the extent of his/her share in the business. Limited liability in simple terms, means that 'you risk what you put in'.

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

An LLP has partners unlike a company which has shareholders.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A LLP has partners unlike a company which has shareholders- this is a true statement. 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. LLP combines the advantages of both the Company and Partnership into a single form of organization.

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

The best way to explain limited liability is this :- 'you risk what you put in'.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The best way to explain limited liability is this: 'you risk what you put in'. The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise. It means that the liability of each person is limited to the extent of his/her share in the business.

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

The partnership may come to an end due to the _________.

  1. death of a partner

  2. insolvency of partner

  3. by giving notice

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

According to the section 39 of the Indian Partnership Act, 1932, the dissolution of the partnership firm may happen in the following cases:

  1. Death of the partner.
  2. Insolvency of the partner.
  3. By giving notice.

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

Whenever a new partner is added to the firm the firm is _______.

  1. dissolved

  2. continued

  3. not affected

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

When a new partner joins a partnership the old partnership is dissolved and a new partnership is formed . Accounting for admission of new partner depends on the nature of arrangement between the existing partners and the new partners. And the new partner contributes according to the agreement.

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

Partnership at will can be dissolved by any partner by ________.

  1. communicating with the principal

  2. not allowed

  3. giving due notice to other partners

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

If a partnership is at will, it can be dissolved by any partner giving a notice to other partners. The notice for dissolution must be in writing. The dissolution will be effective from the date of the notice. In case no date is mentioned in the notice, and then it will be dissolved from the date of receipt of notice. A notice once given can not be withdrawn without the consent of all the partners.

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

Change in the partnership firm mean  ___________________.

  1. new partner is introduced

  2. a partner is adjudicated as an insolvent

  3. both a and b

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

When a new partner is admitted in the partnership and in the consideration of new partner towards the capital of the partnership of the partners . From the date new partner subject to the terms and conditions of the partnership deed , the profit and loss sharing ratio changes , the old partnership shall be liable for all the old debts and liabilities they shall be indemnity and also all the assets and rights of partnership firm against such debts and liabilities and against all proceedings cost , claims in respect thereof.

         Where a partner in a firm is adjudicated as insolvent he ceases to be a partner on the date on which the order of adjudication is made whether or not the firm is thereby dissolve.

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

Good will of the business of a partnership firm is the property of _________.

  1. partners

  2. partner who gave his property to firm

  3. partnership firm

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

A business builds up some reputation after it has continued for some time . If the reputation is good, the firm will come to acquire a fixed clientele in the sense that a number of customers will automatically make their purchases from the firm . This is a very valuable asset even if one can not touch or see it. The asset is known as goodwill.

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

A partner may apply to the court for dissolution of the firm on _____________.

  1. insanity of a partner

  2. misconduct of a partner

  3. perpetual losses in business

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

If a partner has become of unsound mind in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner.

  If there is any misconduct by a partner other than the suing partner due to which a firm suffered losses , then the court may order the dissolution of the firm . Misconduct or guilty of conduct which is likely to effect prejudicial the carrying on of the business . Then the other partner can sue the partner for misconduct.

 In case the business of the firm cannot be carried on save as a loss or on any ground which renders it just and equitable that the firm should be dissolved.