Tag: elements of business

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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

When a minor attains majority, he is liable for _________.

  1. from the date of attaining majority

  2. all the liabilities

  3. only for liabilities which are dealt by him

  4. for all liabilities since the date of admission to the firm as a minor.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
He is not personally liable to third parties for the debts of the firm, on attaining majority, if he continues as a partner, his liability will become unlimited with effect from the date of his original admission into the firm. When a minor becomes major then within 6 months of his attaining the majority he has to elect whether he wants to be a partner or not he may give a public notice regarding his wish to be a partner or not but if he fails to give any notice then he is deemed to be a partner.

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 sub-partner is a person ___________.

  1. who is sharing the profits of some partner.

  2. who does not invest and shares the profits

  3. who invests but does not work

  4. a partner who only gives his name for partnership
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A sub-partner is someone who agrees to share the profits of a specific partner in the firm.

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 Minor in a Partnership is _________.

  1. personally liable

  2. having unlimited liability

  3. liable only when the firm is insolvent

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

A minor admitted to the benefits of a partnership is not personally liable for the firm's debts; their liability is limited to their share in the firm's assets.

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 has not entered into a Partnership agreement and conducts or represents himself as a Partner in a Firm is called _________.

  1. sleeping partner

  2. partner by estoppel

  3. working partner

  4. sub-partner.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A person who represents themselves as a partner, even without a formal agreement, is a partner by estoppel.

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 person who represents himself to be a partner but in reality he is not so, is known as a __________.

  1. inactive partner

  2. partner by estoppel

  3. Partner by default

  4. legal partner
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A person who holds themselves out as a partner to others is known as a partner by estoppel.

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

Holding out partner is based on the principle of _______.

  1. protecting public interest

  2. Estoppel

  3. both a) & b)

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

The doctrine of holding out is based on the principle of estoppel, which prevents a person from denying a fact they have previously represented as true. If a person represents themselves as a partner, they are estopped from denying that status to third parties who relied on that representation.

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 Nominal partner gets _______.

  1. no share in profits

  2. equal share in profits

  3. share in profits proportionate to*contribution

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

A nominal partner is one who lends their name to the firm for reputation purposes but does not contribute capital or participate in management. Consequently, they generally do not receive a share of the profits.

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

Dormant Partner is also known as ________.

  1. Sleeping Partner

  2. Active Partner

  3. Nominal Partner

  4. Sub-Partner.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A dormant partner, also known as a sleeping partner, contributes capital and shares in profits but does not take an active part in the daily management of the firm.

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 introduces B to C as a Partner in his business. B, in fact, was not a Partner but he did not deny the statement. C advanced a loan to A. A could not repay the loan. C can hold B responsible for the repayment of loan because __________.

  1. B is a Sleeping Partner

  2. B is a Sub-Partner

  3. B is a Dormant Partner

  4. B is a Partner by Estoppel.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the doctrine of holding out, if a person allows themselves to be represented as a partner, they become liable to third parties who extend credit to the firm based on that representation. This is known as partnership by estoppel.

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

Dormant partner ______________.

  1. never takes part in business activities.

  2. is not liable for any act done by other partners.

  3. will not share losses of the firm.

  4. existence in partnership is invalid.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A dormant or sleeping partner is characterized by their lack of active participation in the day-to-day management of the firm's business activities, even though they are still liable for the firm's debts.