Tag: elements of business

Questions Related to elements of business

Which of the following is NOT covered by general duties of partners?

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

  1. To carry on the business of the firm to the greatest common advantage of the firm

  2. To be just and faithful to each other

  3. To arrange for audit of accounts of the firm

  4. To keep and render true, proper and correct accounts of the partnership

Show answer
Correct Option: C
Explanation:

In a partnership business, the partners cannot arrange for the audit of the accounts of the firm that is done by the Accounts authority of that company. 

Which of the following is not a right of partner?

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

  1. Every partner has a right to continue in the partnership and not to be expelled from it

  2. A partner has power to act in an emergency for protecting the firm from loss

  3. Every partner is entitled to share in the profits equally

  4. Every partner is entitled to the introduction of a new partner into the firm without consent other partner

Show answer
Correct Option: D
Explanation:

According to the Partnership Act 1932, a partner has no right for any introduction as new partner into the firm with the consent of other partners. 

Every partner is bound to attend _________ to his duties, in the conduct of the business.

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

  1. Systematically

  2. Diligently

  3. Sincerely

  4. Effectively

Show answer
Correct Option: B
Explanation:

In a partnership firm, the partners who perform all the functions related to the conduct of the business are required to perform all such business with utter responsibility. 

___________ can assign or transfer his partnership interest to any other person, so as to make him a partner in the business.

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

  1. No partner

  2. Every partner

  3. Working partner

  4. Nominal partner

Show answer
Correct Option: A
Explanation:

According to the partnership Act 1932, no partner can assign or transfer their partnership to any third person to make him the partner of the business. 

Which of the following statement is correct in relation to assignment of profit by partner?

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

  1. To assignee will have right to ask for the accounts or to interfere in the management of the business

  2. The assignee would be entitled only to share the actual profits from the firm

  3. On dissolution of the firm, the assignee will be entitled to the share of the assets and also to accounts but only from the date of dissolution

  4. All of the above

Show answer
Correct Option: C
Explanation:

When the firm is dissolved then the assignee distributes the asset and liability to all the partners who are entitled of the distribution from the date of the dissolution of the firm. 

Which of the following statement is incorrect?

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

  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

Show answer
Correct Option: C
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. 

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

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

  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

Show answer
Correct Option: A
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. 

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

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

  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

Show answer
Correct Option: A
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.

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

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

  1. Indemnify the firm

  2. Indemnify the other partner

  3. Indemnify all the retiring partners

  4. Indemnify only to working partners

Show answer
Correct Option: A
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.

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

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

  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

Show answer
Correct Option: D