Question 1

A partner may not have the right to dissociate from the partnership.

Accepted Answer

True

Question 2

A partner's profit from a partnership is taxed as income to the firm.

Accepted Answer

A partner's profit from a partnership is taxed as personal income to the individual partner, not as income to the firm. Partnerships are "pass-through" entities for tax purposes, meaning the profits pass through the business to the partners, who then report their share of the profits on their personal tax returns.

Question 3

In a general partnership, the senior partner controls decisions on ordinary matters connected with partnership business.

Accepted Answer

In a general partnership, all partners have an equal say in the decisions related to ordinary matters connected with partnership business. However, decisions related to major issues such as admission of new partners, change in partnership agreement, dissolution of partnership, etc. require the consent of all partners.

Question 4

A partner always has the power to dissociate from the partnership.

Accepted Answer

Under most partnership laws, a partner has the right to dissociate from the partnership at any time, although there may be consequences depending on the specific partnership agreement and applicable laws.

Question 5

A sharing of profits from a business creates a presumption that a partnership exists.

Accepted Answer

A sharing of profits is one of the key elements required to establish the existence of a partnership under common law. The sharing of profits creates a rebuttable presumption that a partnership exists, even if there is no formal agreement or partnership agreement in place.

Question 6

In a general partnership, the acts of one partner in the ordinary course of business can subject the other partners to personal liability.

Accepted Answer

In a general partnership, all partners are jointly and severally liable for the partnership's debts and obligations, including any legal actions resulting from the acts of one partner in the ordinary course of business.

Question 7

Limits on a partner's authority normally are effective only with respect to third parties who are notified of the limitation.

Accepted Answer

Limits on a partner's authority must be communicated to third parties in order to be effective. Without such notification, third parties generally can assume that partners have the authority to act on behalf of the partnership within the ordinary course of business.

Question 8

In a general partnership, the senior partner manages the partnership.

Accepted Answer

In a general partnership, all partners have equal management authority and responsibilities. There is no designated "senior partner" who manages the partnership.

Question 9

A partner's devoting time, energy, and skill to partnership business is a compensable service.

Accepted Answer

The answer of A partner's devoting time, energy, and skill...

Question 10

The intent to associate is irrelevant in terms of the elements of a partnership.

Accepted Answer

The answer of The intent to associate is irrelevant in...

Question 11

A partner has a duty to devote time, skill and energy on behalf of the partnership business.

Accepted Answer

According to partnership law, partners have a fiduciary duty to act in the best interests of the partnership and to devote time, skill, and energy to the partnership business. This duty is known as the duty of loyalty and care. In other words, partners have a legal obligation to put the partnership's interests above their own, and to work hard to make the partnership successful.

Question 12

A third party can never sue one of the partners of a partnership without suing all members of the partnership.

Accepted Answer

The answer of A third party can never sue one...

Question 13

Unlike most agents, each partner in a partnership has an ownership interest in the business.

Accepted Answer

In a partnership, each partner has an ownership interest in the business, meaning they share in the profits and losses of the company. This is different from an agent, who acts on behalf of a principal but does not have ownership rights in the business.

Question 14

If no fixed duration of the partnership is specified, the partnership is a partnership at will, which means that it cannot be dissolved.

Accepted Answer

If no fixed duration is specified, the partnership is still a partnership at will, but it can be dissolved by any partner giving notice to the other partners of their intention to withdraw from the partnership.

Question 15

A partner may pursue his or her own interests without automatically violating the partner's fiduciary duties to the partnership and the other partners.

Accepted Answer

As long as the partner's pursuit of their own interests does not harm the partnership or other partners and they disclose any potential conflicts of interest, they are allowed to pursue their own interests without violating their fiduciary duties.

Question 16

Under some circumstances a non-partner can be regarded as an agent whose acts are binding on the partnership.

Accepted Answer

According to the principle of apparent authority or estoppel, a third party can reasonably assume that a non-partner is an agent of the partnership and rely on their actions as binding on the partnership. This can happen when the partnership allows the non-partner to act on its behalf, or if the non-partner has held themselves out as an agent of the partnership.

Question 17

Most states treat a partnership as an aggregate for most purposes.

Accepted Answer

The answer of Most states treat a partnership as an...

Question 18

A partner is not liable for honest errors in judgment in conducting partnership business.

Accepted Answer

A partner is only liable for willful misconduct, gross negligence, or breach of duty, not for honest errors in judgment.

Question 19

A majority of the states treat a partnership as an entity for most purposes.

Accepted Answer

Most states treat a partnership as an entity for most purposes, meaning that the partnership itself can enter into contracts, sue or be sued, and own property separately from the partners.

Question 20

A partnership is a pass-through entity and a taxpaying entity.

Accepted Answer

The answer of A partnership is a pass-through entity and...

Quiz 3: All Forms of Partnerships