Question 1

Which of the following is the most convincing evidence of a partnership arrangement?

Accepted Answer

Carrying on a business for profit together, even without a formal agreement, is a key indicator of a partnership, as it demonstrates the intention to share profits and losses.

Question 2

Which of the following is correct with regard to partnership property?

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), there is a rebuttable presumption that property acquired with partnership funds is partnership property unless a contrary intention is shown.

Question 3

A __________ is an unincorporated business association consisting of at least one general partner and at least one limited partner.

Accepted Answer

A limited partnership is a business structure where there is at least one general partner with unlimited liability and one or more limited partners with liability limited to their investment.

Question 4

Under the UPA, a partner's ownership interest in any specific item of partnership property is that of a:

Accepted Answer

Under the Uniform Partnership Act (UPA), a partner's ownership interest in specific partnership property is as a "tenant in partnership," meaning the property is owned by the partnership entity rather than the individual partners.

Question 5

To be partnership property, title to real estate bought with partnership assets and used by the partnership may be put in the name of:

Accepted Answer

For real estate to be considered partnership property, it can be titled in the name of the partnership or in the name of one or more partners, provided that the partnership's name is indicated in the instrument transferring title.

Question 6

Andre invested $100,000 in a partnership with Erik and Louis. Andre's contract with the partnership states he will receive a portion of partnership profits, but he will be liable for partnership's debts only to the extent of the $100,000 he invested. Andre is:

Accepted Answer

Andre is a limited partner because his liability for the partnership's debts is limited to the amount he invested, which is a characteristic of limited partners.

Question 7

Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals. They each work two days a week. Donations fund the day-to-day operations. Do they have a partnership?

Accepted Answer

A partnership typically involves a business for profit, and since the shelter is funded by donations and not intended for profit, it does not constitute a partnership.

Question 8

The RUPA treats a partnership as a legal entity in which one of the following respects?

Accepted Answer

The Revised Uniform Partnership Act (RUPA) treats a partnership as a legal entity for the purpose of suing or being sued, allowing the partnership to be treated as a separate entity from the individual partners in legal proceedings.

Question 9

Which of the following would be the most convincing evidence of a partnership?

Accepted Answer

An agreement to share profits and losses is a key indicator of a partnership, as it demonstrates a mutual interest in the business's success and risk.

Question 10

A partnership agreement should include all but which one of the following?

Accepted Answer

A partnership agreement typically includes the duties of the partners, capital contributions, and the division of profits and losses. However, tax liability is generally not divided among partners in the agreement, as it is determined by tax laws and regulations.

Question 11

Marilyn, George, and Christine pool their money to buy land to operate a vegetable farm from which they plan to sell the produce and share the profits or losses. Are they partners?

Accepted Answer

They are partners because they are associating to carry on a for-profit business which they co-own, meeting the definition of a partnership.

Question 12

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions ordinarily results in a:

Accepted Answer

A joint venture is typically formed for a single business transaction or a limited series of transactions, involving co-ownership and shared control.

Question 13

A partner's transferable interest is subject to the claims of that partner's creditors who may obtain a judicial lien known as a(n) __________ against the partner's transferable interest.

Accepted Answer

A charging order is a legal remedy that allows a creditor to obtain a lien on a partner's transferable interest in a partnership to satisfy a debt.

Question 14

The law establishes a test for determining whether a partnership has been formed. The test includes which of the following?

Accepted Answer

A partnership is formed by an association of two or more persons to carry on as co-owners of a business for profit, which is the key element in determining a partnership.

Question 15

Which of the following would lack the capacity to become a partner?

Accepted Answer

An adjudicated incompetent lacks the legal capacity to enter into contracts, including partnership agreements.

Question 16

In the case of In Re KeyTronics , the court held that:

Accepted Answer

The court held that the intent of the parties to form a partnership will be ascertained objectively from all the evidence and circumstances, rather than solely relying on their subjective intent.

Question 17

In the case of Thomas v. Lloyd , the court held:

Accepted Answer

The court held that whether real estate titled in the names of individual partners is partnership property is a question of fact, and the burden of proof is on the one alleging that the actual ownership does not match the names on the legal title.

Question 18

Which of the following is NOT an advantage of a partnership?

Accepted Answer

In a partnership, each partner typically has unlimited liability, meaning they are personally responsible for the debts and obligations of the business, unlike in a corporation where shareholders have limited liability.

Question 19

Arthur, Betty, and Clara each inherit an undivided one-third interest in an apartment complex. Instead of selling it, they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money. What are they?

Accepted Answer

When individuals co-own a business with the intent to share profits, they form a partnership, even if they do not have a formal partnership agreement.

Question 20

Which of the following is the correct definition for a partnership?

Accepted Answer

A partnership is defined as an association of two or more persons to carry on as co-owners a business for profit.

Quiz 30: Formation and Internal Relations of General Partnerships