Question 1

Non-registration of the partnership name will violate the assumed or fictitious name statutes of most states.

Accepted Answer

Most states require partnerships to register their assumed or fictitious name in order to prevent confusion and ensure transparency in business transactions. Failure to do so may result in legal violations and penalties.

Question 2

The concept of a business firm as a legal person,with existence and accountability separate from its owners stems from _____.

Accepted Answer

The concept of a business firm as a legal person, with existence and accountability separate from its owners, stems from entity theory. This theory recognizes the business entity as a separate legal entity that can own assets, contract with other entities, sue and be sued in court.

Question 3

Unlike corporations,partnerships can be created accidentally.

Accepted Answer

This is because partnerships can be formed simply through the actions of two or more individuals engaging in activities together for profit without formally registering as a partnership with a government agency.

Question 4

Partnership is limited to a direct association between human beings.

Accepted Answer

Partnership can also refer to a direct association between businesses, organizations or even countries.

Question 5

Under the common-law theory,a partnership was:

Accepted Answer

Under the common-law theory, a partnership is not considered a legal entity separate from its individual partners. Instead, it is simply a common name for a group of two or more individuals who share profits and losses in a business venture. As such, the partnership does not have any legal rights or abilities separate from those of its individual partners.

Question 6

Unlike the Revised Uniform Partnership Act RUPA),the Uniform Partnership Act UPA)does not permit partnerships to form among anyone apart from natural persons.

Accepted Answer

Both the Revised Uniform Partnership Act (RUPA) and the Uniform Partnership Act (UPA) allow partnerships to be formed by entities other than natural persons, including corporations and other partnerships.

Question 7

According to the Uniform Partnership Act,the various forms of joint ownership by themselves do not establish partnership,whether or not the co-owners share profits made by the use of the property.

Accepted Answer

The Uniform Partnership Act (UPA) states that joint ownership alone does not create a partnership, even if the joint owners share profits generated by the property. To form a partnership, the parties must have the intent to conduct business together for a profit.

Question 8

It is possible to become someone's partner without intending to or even realizing that partnership has been created.

Accepted Answer

This could happen through actions like co-owning property, sharing finances or debts, or having a child together. Additionally, some legal systems may recognize certain forms of partnership even if the individuals involved do not consider themselves to be partners.

Question 9

A _____ is the association of two or more people carrying on a business as co-owners for profit.

Accepted Answer

A partnership is the association of two or more people carrying on a business as co-owners for profit. In a partnership, the partners share the profits and losses of the business, and each partner is personally liable for the debts and obligations of the partnership.

Question 10

All the states of the U.S.have now adopted the Revised Uniform Partnership Act RUPA)as promulgated in 1997.

Accepted Answer

Not all states have adopted RUPA, some states have enacted their own partnership laws or have adopted an earlier version of the Uniform Partnership Act.

Question 11

Partnership law permits an investor to put capital into a general partnership and realize tax benefits without liability for the acts of the other partners.

Accepted Answer

Partnership law generally holds all partners jointly and severally liable for the debts and obligations of the partnership, putting investors who contribute capital at risk for the actions of other partners. Limited partnerships, however, provide a structure that allows for limited liability for certain partners who do not participate in the management of the partnership.

Question 12

The mercantile theory of the law merchant held that the partnership is a legal entity that can have rights and duties independent of those of its members.

Accepted Answer

According to the mercantile theory of the law merchant, the partnership is considered a legal entity with its own rights and obligations, separate from those of its individual members.

Question 13

The Uniform Partnership Act UPA)and the Uniform Limited Partnership Act RUPA)were adopted by all the states of the U.S.,except Pennsylvania.

Accepted Answer

Pennsylvania has adopted both the Uniform Partnership Act (UPA) and the Revised Uniform Limited Partnership Act (RULPA).

Question 14

A corporation can never be a partner in a partnership.

Accepted Answer

A corporation can be a partner in a partnership as long as it is legally allowed to do so under its charter and the laws of the jurisdiction where the partnership is formed.

Question 15

Partnerships "at will" are not covered by the Statute of Frauds.

Accepted Answer

Partnerships "at will" are not required to have a written agreement and are therefore not subject to the Statute of Frauds, which requires certain contracts to be in writing to be enforceable.

Question 16

The theory that a business firm is a collection of individual owners who bind themselves together to share profits is known as _____

Accepted Answer

Aggregate theory posits that a business firm is essentially a collection of individual owners who come together to share profits, viewing the firm more as a partnership of individuals rather than a separate legal entity.

Question 17

A partnership may or may not have a partnership agreement as long as the tests of partnership are met.

Accepted Answer

A partnership can exist without a formal partnership agreement if the business operation meets the criteria for a partnership, such as joint ownership and sharing of profits and losses. However, having a written agreement is advisable for clarity and dispute resolution.

Question 18

The _____,completed in 1914 and the _____,completed in the 1916 were the basis of partnership law in United States for many decades.

Accepted Answer

The Uniform Partnership Act (UPA) of 1914 and the Uniform Limited Partnership Act (ULPA) of 1916 were foundational in establishing partnership law in the United States, serving as the basis for how partnerships were legally recognized and managed for many years.

Question 19

Partnerships are not taxable entities and so they do not pay income taxes.

Accepted Answer

Partnerships are considered "pass-through" entities for tax purposes, meaning the partnership itself does not pay income taxes. Instead, profits and losses are passed through to the individual partners, who then report this income on their personal tax returns.

Question 20

The fictitious names statutes in most states of US require that anyone doing business under a name other than his real name register the name.

Accepted Answer

This is correct. The fictitious names statutes are also known as "doing business as" (DBA) statutes, and they require individuals and businesses to register any name under which they conduct business that is not their legal name.

Quiz 18: Partnerships: General Characteristics and Formation