Deck 35: Limited Partnerships and Special Partnerships

Question 1

It is not necessary for a limited partnership to have general partners if the limited partners share management responsibility among themselves.

Answer 1

False

Question 2

Master limited partnerships are traded publicly.

Answer 2

True

Question 3

Justin and Michael form a limited partnership and start a car dealership.Justin is the general partner and Michael is the limited partner.Seven months after the commencement of the business,Pedro makes an investment and wishes to become a general partner.A week later,Michael's mother wishes to join the partnership as a limited partner.Which of the following is true in this scenario?

A)Pedro cannot become a general partner to the partnership after the business has commenced.
B)Pedro cannot become a general partner to the partnership as a limited partnership can only have one general partner.
C)Michael's mother cannot become a limited partner to the partnership as a limited partnership can only have one limited partner.
D)Both Pedro and Michael's mother can choose to become either general or limited partners to the partnership.

Answer 3

D

Question 4

Which of the following partners in a limited partnership invest capital,manage the business,and are personally liable for partnership debts?

A)specific partners
B)limited partners
C)general partners
D)sole proprietors

Question 5

In the context of limited partnership,general partners are not personally liable for partnership debts beyond their capital contributions.

Question 6

Limited partners do not participate in the management of the partnership.

Question 7

Under partnership law,________ have the right to manage the affairs of the limited partnership.

A)angel investors
B)sole proprietors
C)limited partners
D)general partners

Question 8

Partners in a limited partnership who invest capital and manage the business are called general partners.

Question 9

A limited liability limited partnership limits the liability of general partners.

Question 10

Corporations are permitted to become general partners to a limited partnership.

Question 11

A(n)________ is a document that two or more persons must execute and sign that makes a limited partnership legal and binding.

A)limited partnership agreement
B)certificate of limited partnership
C)article of limited partnership
D)limited trade affidavit

Question 12

Limited partnerships are also known as ________.

A)sole partnerships
B)ordinary partnerships
C)general partnerships
D)special partnerships

Question 13

Which of the following partners of a limited partnership invest capital but do not participate in management?

A)specific partners
B)limited partners
C)general partners
D)sole proprietors

Question 14

Which of the following is true of general and limited partners in a limited partnership?

A)Limited partners are exempt from annual capital investment and need only participate in management functions.
B)General partners are not personally liable for partnership debts.
C)General partners are required to invest capital and refrain from managerial activities.
D)Limited partners are not personally liable for partnership debts beyond their capital contributions.

Question 15

Which of the following activities is permissible for limited partners?

A)self-dealing
B)usurping an opportunity
C)being a contractor of the partnership
D)competing with the partnership

Question 16

A limited partnership has two types of partners,________.

A)unique partners and limited partners
B)general partners and limited partners
C)ordinary partners and limited partners
D)special partners and limited partners

Question 17

A limited partnership cannot have general partners.

Question 18

Which of the following is true of a limited partnership?

A)Other limited partnerships cannot become limited partners in an existing limited partnership.
B)A limited partner is personally liable for the debts of the partnership.
C)Corporations are allowed to become partners in a limited partnership.
D)A limited partnership can have only one general partner but multiple limited partners.

Question 19

In most states,the formation,operation,and termination of limited partnerships are regulated by the Revised Uniform Limited Partnership Act.

Question 20

Laura is an investor and a limited partner in a limited partnership.Two years after she becomes a limited partner,Laura thinks that the general partners are not doing a very good job managing the affairs of the limited partnership and participates in the management of the limited partnership.While she is participating in management,a bank loans $1 million to the limited partnership,believing that Laura is a general partner.If the limited partnership defaults on the $1 million loan,which of the following holds well?

A)Laura is not personally liable as she is a limited partner on paper.
B)Laura is personally liable if the bank, in good faith, thought she was a general partner.
C)Laura has unlimited personal liability as a limited partner.
D)Laura's liability is restricted to the value of her capital investment in the partnership.

Question 21

A limited partnership is a ________ in the state in which it is organized.

A)sole proprietorship
B)limited liability corporation
C)domestic limited partnership
D)general partnership

Question 22

Which of the following documents does a domestic limited partnership require to be allowed to operate in another state?

A)trade name certificate
B)certificate of registration
C)limited trade affidavit
D)notice of electronic filing

Question 23

A limited partnership is formed when the ________ is filed.

A)certificate of cancellation
B)articles of limited partnership
C)limited trade affidavit
D)certificate of limited partnership

Question 24

The ULPA supersedes the RULPA in the states that have adopted it.

Question 25

The name of a limited partnership can include any or all of the limited partners' surnames,in any circumstances.

Question 26

In which of the following cases can the name of a limited partnership include the surname of a limited partner?

A)the limited partner has stayed longer than all other partners
B)the name is also the surname of a general partner
C)the limited partner has invested more than the general partner
D)the name is unanimously voted for by other limited partners

Question 27

Defective formation of a limited partnership occurs when a certificate of limited partnership is not properly filed.

Question 28

A limited partnership is a foreign limited partnership outside the state in which it is organized.

Question 29

________ is said to have occurred if a certificate of limited partnership was not properly filed.

A)Defective formation
B)Illegitimate partnership
C)Void partnership
D)Voidable association

Question 30

New partners cannot be added to a limited partnership once it is formed.

Question 31

A limited partnership that was organized in Alabama and operating in Texas with no operations outside the U.S.is considered a ________ in Texas.

A)foreign limited partnership
B)limited liability corporation
C)domestic limited partnership
D)general partnership

Question 32

The creation of a limited partnership is formal and requires public disclosure.

Question 33

The ULPA contains provisions for the formation,operation,and dissolution of limited partnerships.

Question 34

A master limited partnership is a type of limited partnership that is listed on a stock exchange and is publicly traded to provide liquidity to investors.

Question 35

Which of the following information should a certificate of limited partnership contain?

A)the latest date of dissolution of the partnership
B)the clause that does not accept new general partners
C)the name of the party who becomes a general partner in the event of transfer
D)the scope of potential business opportunities and related investment

Question 36

Which of the following is mandatory for the addition of a new limited partner to an existing limited partnership?

A)death or retirement of a limited partner
B)majority vote in a formal election constituting all partners
C)written consent of all partners
D)merger with another limited partnership

Question 37

The words limited partnership can be abbreviated to Ltd.in the title of a limited partnership.

Question 38

In most states,the formation,operation,and termination of limited partnerships are regulated by the ________.

A)RULPA
B)ADA
C)ADEA
D)EEOC

Question 39

Which of the following governs a limited partnership,its internal affairs,and the liability of its limited partners?

A)the federal government
B)all states in which the business operates
C)the articles of limited partnership
D)the law of the state in which it is organized

Question 40

In the absence of a partnership agreement,profits and losses from a limited partnership are shared on the basis of the value of each partner's capital contribution.

Question 41

Which of the following is true of the admission of a new general partner to an existing limited partnership?

A)Only limited partners can be admitted to an existing partnership.
B)A limited partnership agreement cannot waive the right of partners to approve the admission of new general partners.
C)The oral consent of all partners is enough for admission of a general partner.
D)Consent of all general partners is sufficient for the admission of a new limited partner.

Question 42

What are the constraints on the name of a limited partnership? How do they influence a limited partner?

Question 43

Limited partners have unlimited personal liability for the debts and obligations of the limited partnership.

Question 44

New general partners can be admitted only with the ________.

A)approval of at least two-thirds of the partners
B)specific consent of each partner
C)merger with another limited partnership
D)death of or transfer by a general partner

Question 45

Briefly explain the liabilities of general and limited partners in a limited partnership.

Question 46

Acting as a surety for the limited partnership makes a limited partner lose his or her limited liability.

Question 47

According to the RULPA,what liability does a corporation have if it is a general partner to a limited partnership?

A)unlimited personal liability
B)liability restricted to debts up to its capital contributions
C)liability of termination as partner
D)unlimited organizational capital liability

Question 48

Explain the types of partners in a limited partnership.What are their liabilities? Who is permitted to join as a partner to such a partnership?

Question 49

A(n)________ is a document that sets forth the rights and duties of general and limited partners.

A)limited trade affidavit
B)limited partnership agreement
C)certificate of registration
D)certificate of limited partnership

Question 50

How are profits and losses shared in the absence of a limited partnership agreement?

A)Profits and losses are shared equally among all partners.
B)Profits and losses are shared equally among general partners and unequally among limited partners.
C)Profits are shared equally among all partners, losses are shared based on the value of each partner's capital contribution.
D)Both profits and losses are shared on the basis of the value of each partner's capital contribution.

Question 51

Which of the following types of liability do general partners of a limited partnership have for the debts and obligations of the limited partnership?

A)unlimited personal liability
B)limited capital liability
C)liability of termination as partner
D)limited personal liability

Question 52

A limited partner may engage in voting on the dissolution of the limited partnership without losing his or her limited liability.

Question 53

Which of the following is true of a limited partnership agreement?

A)It provides that all transactions must be approved by all partners.
B)It does not contain information about dissolution of the partnership as it is an agreement of formation.
C)It provides that general and limited partners have equal voting rights.
D)It sets forth the terms and conditions regarding the termination of the partnership.

Question 54

A ________ is a document that is filed with the secretary of state upon the dissolution of a limited partnership.

A)certificate of cancellation
B)termination affidavit
C)statement of dissolution
D)certificate of agreement

Question 55

Limited partners are not liable for the debts and obligations of the partnership if they participate in the management of the limited partnership,without being employed as a manager or an executive.

Question 56

Which of the following types of liability do limited partners of a limited partnership have for the debts and obligations of the limited partnerships?

A)unlimited personal liability
B)liability restricted to debts up to their capital contributions
C)liability of termination as partner
D)unlimited organizational capital liability

Question 57

Explain,with an example,the sharing of profits and losses in a limited partnership.

Question 58

Sam Mueller and Geoffrey Robinson enter into a limited partnership in which Sam is the general partner and Geoffrey is the limited partner.They borrow $50,000 to start a business.Keeping all rules of naming their businesses in mind,they start a law firm named Robinson-Mueller Legal Associates.Martin Humphrey joins them after eleven months as a general partner but does not include his surname in the name of the business.If the business fails,which of the following is true?

A)Only Sam, being the sole general partner is liable to the creditor.
B)Martin has unlimited personal liability for not including his surname in the name of the business.
C)Geoffrey is liable as a general partner as he included his surname in the business with full knowledge.
D)All three partners are equally liable to the creditor, irrespective of including their surname in the title of the business.

Question 59

Partners who erroneously,but in good faith,believe they have become limited partners can escape liability as general partners by ________.

A)adding their surname to the name of the business establishment
B)filing for a refund of his or her initial investment with interest
C)bringing a lawsuit against all general and limited partners
D)withdrawing from any future equity participation in the enterprise

Question 60

A ________ is a limited partnership with liquid investment,and whose limited partnership interests are traded on organized securities exchanges such as the New York Stock Exchange.

A)limited liability limited partnership
B)sole proprietorship
C)foreign limited partnership
D)master limited partnership

Question 61

The retirement of a general partner does not dissolve a limited partnership.

Question 62

The end of the life of the limited partnership,as specified in the certificate of limited partnership,causes the dissolution of a limited partnership.

Question 63

A certificate of cancellation is a document that is filed with the secretary of state upon the dissolution of a limited partnership.

Question 64

A limited liability limited partnership is a ________ in the state in which it is organized.

A)sole proprietorship
B)limited liability corporation
C)domestic LLLP
D)general partnership

Question 65

Limited partners of a limited liability limited partnership (LLLP)are involved in the management functions of the partnership.

Question 66

If Gerard Koontz retires from being a general partner in a limited partnership,which of the following is true?

A)A member from Mr. Koontz's immediate family is allowed to take his partnership interest.
B)Only the person Mr. Koontz nominates can take his partnership interest.
C)The partnership is dissolved according to RULPA norms.
D)The partnership operates normally without a general partner.

Question 67

Which of the following is a cause for the dissolution of a partnership?

A)written consent of the general partners
B)withdrawal of a general partner
C)withdrawal of all limited partners
D)acquisition of business by another partnership

Question 68

A ________ is a special type of limited partnership that has both general partners and limited partners,where both the general and limited partners have limited liability and are not personally liable for its debts.

A)limited liability limited partnership
B)master limited partnership
C)sole proprietorship
D)foreign limited partnership

Question 69

In which of the following circumstances is a decree of judicial dissolution granted to a partner?

A)A partner is rendered incapacitated to perform his or her duties.
B)The partners do not have sufficient funds to repay debts.
C)It is not reasonably practical to carry on the business in conformity with the limited partnership agreement.
D)All limited partners have withdrawn but the general partners want to continue with the partnership.

Question 70

Upon dissolution,a limited partnership's affairs must be wound up by partners who have acted wrongfully in actions that resulted in the dissolution.

Question 71

If a corporation is a general partner to a limited partnership,which of the following would result from the dissolution of the corporation?

A)dissolution of the limited partnership
B)creation of a general partnership
C)reformation of the limited partnership
D)transfer of the partnership to other parties

Question 72

Any partner may petition the court to wind up the affairs of a limited partnership.

Question 73

A partner who winds up the affairs of a limited partnership has the same rights,powers,and duties as a partner winding up a general partnership.

Question 74

A decree of judicial dissolution is granted to a partner whenever it is not reasonably practical to carry on the business in conformity with the limited partnership agreement.

Question 75

Neither the general partners nor the limited partners have personal liability for the debts and obligations of the LLLP.

Question 76

An existing limited partnership cannot be converted to a limited liability limited partnership.

Question 77

In which of the following forms of business partnerships are both general and limited partners not personally liable for debts?

A)sole proprietorship
B)general partnership
C)master limited partnership
D)limited liability limited partnership

Question 78

Which of the following happens when a general partner withdraws from a limited partnership?

A)The partnership must be sold.
B)The partnership is transferred.
C)The partnership is dissolved.
D)The partnership operates normally.

Question 79

Briefly explain the events that cause the dissolution of a limited partnership under RULPA.

Question 80

Who among the following get first priority in the distribution of assets upon the dissolution of a partnership?

A)investors
B)limited partners
C)general partners
D)creditors