Deck 22: Partnerships: General Characteristics and Formation

Question 1

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.

Answer 1

False

Question 2

Partnership is limited to a direct association between human beings.

Answer 2

False

Question 3

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

A) entity theory
B) aggregate theory
C) concession theory
D) conduit theory
E) appropriation theory

Answer 3

B

Question 4

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

Question 5

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.

Question 6

A corporation can never be a partner in a partnership.

Question 7

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

A) Uniform Partnership Act UPA); Uniform Limited Partnership Act ULPA)
B) Universal Partnership Act UPA); Revised Partnership Act RPA)
C) Uniform Partnership Act UPA); Revised Uniform Partnership Act RUPA)
D) United Partners Act UPA); Uniform Limitation Act ULA)
E) Partnership Act; Uniform Partnership Act

Question 8

Under the common-law theory, a partnership was:

A) a legal entity.
B) a common name for an aggregate of individuals.
C) a group that the law recognized as having legal rights separate from that of the partners.
D) a group that had the right to own and dispose of property independent of its members.
E) an entity that had the right to sue and be sued.

Question 9

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

Question 10

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

A) entity theory
B) aggregate theory
C) concession theory
D) conduit theory
E) appropriation theory

Question 11

Unlike corporations, partnerships can be created accidentally.

Question 12

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

Question 13

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.

Question 14

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

A) limited liability company
B) trust
C) partnership
D) proprietorship
E) agency relationship

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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.

Question 20

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

Question 21

A partnership intentionally created and recognized, orally or in writing is known as an) _____ partnership.

A) estoppel
B) agency
C) implied
D) apparent
E) express

Question 22

What are the various terms that a partnership agreement or contract should clearly set forth?

Question 23

Which of the following is most likely to be considered a partnership?

A) GoodHomes, a charitable organization formed by Ron and Ben, who share ownership.
B) Wyler Corporation, a tinned food manufacturing organization, owned by 40 individuals but managed by Emily and Emma Wyler.
C) Beautiful You, a small cosmetics retail shop, owned and managed by Delores Young.
D) Scissors, a salon for women, co-owned and managed jointly by Wanda and Ginny, who share profits equally.
E) Bright Red, a non-profit organization concerned with helping the elderly.

Question 24

_____ is a partnership arising when in fact none exists, where one allows himself or herself to be represented as a partner, thus incurring partnership liability.

A) Partnership by estoppel
B) Implied partnership
C) Express partnership
D) Express agency
E) Implied agency

Question 25

Which of the following statements is true of partnerships?

A) Partnership is limited to indirect association between human beings.
B) Family members cannot be partners.
C) Partnership cannot constitute an association between other entities.
D) Partnerships between parents and minor children are lawful.
E) Partnerships must be created by written agreements.

Question 26

Differentiate between the entity theory and the aggregate theory. How did the common law theory and the mercantile theory of law treat partnerships with respect to legal entity?

Question 27

Which of the following is a necessary condition for a partnership by estoppel?

A) The assent of both parties in the partnership
B) A representation to a third party that there is in fact a partnership
C) The reduction of the partnership agreement in writing
D) The sharing of profits between both partners
E) The sharing of ownership equally among all parties

Question 28

Which of the following is true of partnerships as entities?

A) Partnerships are taxable entities and pay income taxes.
B) A partner can unilaterally dispose of partnership property under both RUPA and UPA.
C) A partnership cannot be involuntarily thrust into a bankruptcy proceeding.
D) A partnership may keep business records as if it were a separate entity.
E) Under RUPA, a partnership does not have entity characteristics.

Question 29

Michelle bakes cakes during her vacations and sells them to people in her neighborhood. Her friend Diana visits her during the vacation and helps her out in baking. Michelle knows that baking is a lot of work, and insists on paying Diana for helping her. Diana picks up the techniques of baking quickly and soon begins visiting Michelle daily, to help her bake. She begins looking for new customers for cakes and, on Michelle's insistence, they start sharing the profits. Under this case, Michelle and Diana have an) _____ partnership.

A) express
B) lingering
C) implied
D) willful
E) estoppel

Question 30

Mr. Brown, Mr. Hobbs, and Mr. Young want to enter into a partnership to open a food joint. Which of the following names for their partnership need not be registered under the fictitious names statutes of their state?

A) Yumm-Tumm
B) Good Food Corporation
C) Brown, Hobbs, and Young
D) Farm-Fresh Foods
E) Fill- it-up Inc.

Question 31

If the business cannot be performed within one year from the time that the agreement is entered into, the partnership agreement should be in writing to avoid invalidation under the:

A) Statute of Estoppel.
B) Statute of Frauds.
C) Uniform Partnership Act.
D) Statute of Co-ownership.
E) National Conference of Commissioners and Uniform Laws.

Question 32

Which of the following is true of express partnerships?

A) They must be created in writing.
B) They are limited to a direct association of human beings.
C) The name must be registered if it is fictitious.
D) They are created unintentionally.
E) A partnership agreement is necessary for creation.