Deck 33: Dissolution of a Partnership

Question 1

Once a partnership is dissolved, assets are distributed:

A) according to partnership deed.
B) according to the capital contribution.
C) according to liabilities incurred.
D) according to the profit contributions of each partner.

Answer 1

A

Question 2

When one partner is declared insane by a court:

A) the firm ceases to exist.
B) the other partners must wind up the firm.
C) the partnership can be dissolved.
D) the business is declared futile.

Answer 2

C

Question 3

Partners who have incurred liabilities on behalf of a firm are entitled to reimbursement.

Answer 3

True

Question 4

In a partnership for a definite term, any partner has the right to withdraw at any time.

Question 5

A representative of a deceased partner may act as a temporary partner.

Question 6

A temporary inability of one partner to perform duties constitutes as incapacity.

Question 7

A partnership can be dissolved at anytime by the partners with mutual consent.

Question 8

Bankruptcy of a partnership does not terminate it.

Question 9

Dissolution of partnership relieves the partners of their duties to each other.

Question 10

The withdrawal of one partner at any time does not dissolve the partnership.

Question 11

One partner can compel the other members to assume continued losses after the success of the business becomes highly improbable.

Question 12

Notice of dissolution of a partnership is not necessary to third persons who have done business with the firm.

Question 13

Which of the following are justifiable reasons for a court to decree a partnership as dissolved?

A) One partner receives profits from external interests.
B) One partner becomes incapable of performing his functions.
C) A firm is sued by a third-party for non-payment of dues.
D) A firm incurs losses in two successive years.

Question 14

Which of the following is true regarding notice of a partnership's dissolution?

A) Notice of dissolution must be given through a newspaper in order to be legally acceptable.
B) Notice of dissolution is necessary when the partnership was dissolved by the operation of law.
C) Notice of dissolution is necessary when the partnership was dissolved by a judicial decree.
D) Notice of dissolution is not necessary when a dormant or a secret partner retires.

Question 15

A partner may obtain a decree of dissolution when a court declares another partner insane or of unsound mind.

Question 16

Explain how a court dissolves a company on basis of futility.

Question 17

Which of the following best describes a dissolution of a partnership?

A) It is a change in relation of partners by elimination of one.
B) It is the re-distribution of capital among partners.
C) It is the taking care of outstanding obligations.
D) It is a change in relation of partners by addition of one.

Question 18

When one partner dies, the other partners are entitled to:

A) distribute the deceased partner's capital among themselves.
B) dissolve the partnership and add another partner.
C) enforce liability on the partner's spouse.
D) declare the partnership as futile.

Question 19

Brothers Inc., a partnership firm, consisted of three partners Jim, Mark, and Jake. However, Jim was declared bankrupt by the court and the company suffered considerable losses during the same time. Which of the following is likely to be true in this scenario?

A) Jake and Mark can declare the firm to be bankrupt.
B) Jim is automatically exempt from liabilities.
C) Jake and Mark can enforce the liability on Jim.
D) Jim can continue to be a partner in the firm.

Question 20

A withdrawing partner is entitled to:

A) receive exemption from liability for company losses.
B) be exempt from personal taxes.
C) receive undistributed profits.
D) be exempt from outstanding debts.