Question 1

Fact Pattern 29-2Krispin and Linley are partners in Mobile Devises, an online marketing firm.
-Refer to Fact Pattern 29-2.Linley dissociates from Mobile.Krispin signs a contract with Organic Olives,a food seller,apparently on Mobile's behalf.Organic Olives does not know of Linley's dissociation.The contract is binding on

Accepted Answer

The contract is binding on Krispin, Linley, and Mobile because Organic Olives was not aware of Linley's dissociation, making the partnership still liable for the contract.

Question 2

Forrest and Gentry do business as Forrest & Gentry Accountants,a partnership.This firm is governed by the Uniform Partnership Act​

Accepted Answer

The Uniform Partnership Act governs partnerships in the absence of an express agreement.

Question 3

Clu,Dolf,and Elton do business as Fertile Valley Farm.Clu's relationship to the firm ends,but it continues to do business.This is

Accepted Answer

This is dissociation, as it refers to the withdrawal of one partner from a partnership while the business continues to operate under the same name and with the remaining partners.

Question 4

Silvano owns Textbooks Plus,a sole proprietorship that sells textbooks and other school supplies.When Silvano dies,Textbooks Plus will automatically

Accepted Answer

A sole proprietorship is not a separate legal entity from its owner. When the owner dies, the business does not automatically continue and typically ceases to exist unless arrangements are made prior to the owner's death.

Question 5

Steffi and Ty agree in an exchange of e-mail to form a partnership to deal in transfers of real property.Their partnership agreement is legally binding

Accepted Answer

A partnership agreement can be legally binding without being filed with the state, put in writing, or involving an exchange of consideration, as long as there is mutual consent and intent to form a partnership.

Question 6

Fact Pattern 29-2Krispin and Linley are partners in Mobile Devises, an online marketing firm.
-Refer to Fact Pattern 29-2.Krispin signs a contract with Natural Valley Chocolate,a candy maker and seller,apparently on Mobile's behalf.The contract is binding on

Accepted Answer

As partners in a firm, Krispin and Linley are both agents of the partnership and can bind the partnership (Mobile Devises) in contracts made in the ordinary course of business. Therefore, the contract is binding on Krispin, Linley, and Mobile.

Question 7

Olav owns Precision Painting,a sole proprietorship.Olav's liability is

Accepted Answer

As a sole proprietorship, Olav is personally liable for all debts and obligations of the business. This means that his liability is unlimited and his personal assets can be used to satisfy any debts or legal judgments against the business.

Question 8

Ralph and Simone do business as Tech Troubleshooters,a partnership.In most states,for the purposes of collecting judgments and having accounting performed,Tech Troubleshooters would be treated as​

Accepted Answer

Most likely, Tech Troubleshooters would be treated as an entity for the purposes of collecting judgments and having accounting performed, meaning that the partnership itself would be viewed as a separate legal and financial unit from its individual members. This would allow the partnership to own property, enter into contracts, and sue or be sued in its own name.

Question 9

Fact Pattern 29-1Abby starts up Bowls to serve and sell soups for workday lunches. Abby leases space in an office building owned by Carmen. The lease requires Abby to pay Carmen a base rental of $1,250, plus 10 percent of Bowls' profits, each month. The term is two years. Abby hires Deja to take and fill customers' orders at an hourly wage of $12.50, plus tips.
-Refer to Fact Pattern 29-1.Abby and Deja are​

Accepted Answer

Abby and Deja are not partners because Deja does not have an ownership interest or management rights in Bowls. She is simply an employee receiving an hourly wage and tips.

Question 10

Kari is the sole proprietor of Living Earth Garden Shop.As a sole proprietor,on the business's profits,Kari pays

Accepted Answer

The answer of Kari is the sole proprietor of Living...

Question 11

Bo and Clancy decide to do business as Marketing & Promotion Services.To be a partnership,this association can result from an agreement that is​

Accepted Answer

A partnership can be formed through an oral, written, or implied agreement. Therefore, option C is the best choice.

Question 12

Chet is a partner in Diligent Accounting Service.Chet can inspect

Accepted Answer

As a partner, Chet has the right to inspect all of the partnership's books and records, as partners have a fiduciary duty to each other and the partnership, which includes the right to access information necessary to fulfill their responsibilities.

Question 13

Kathy and John decide to form a partnership to sell fish food to local fish farms for the next five years.To be enforceable under the Statute of Frauds,the partnership agreement​

Accepted Answer

Under the Statute of Frauds, agreements that are not performed within one year must be in writing to be enforceable. Since the partnership agreement is for a period of five years, it must be in writing to be enforceable.

Question 14

Brad and Carlita are partners in Doctors for Children,a medical clinic.Brad's dissociation from the firm results in

Accepted Answer

In case of dissociation of a partner, the partnership may buy out the exiting partner's interest in the firm. This allows the remaining partner(s) to continue running the business without having to terminate the partnership.

Question 15

Fact Pattern 29-1Abby starts up Bowls to serve and sell soups for workday lunches. Abby leases space in an office building owned by Carmen. The lease requires Abby to pay Carmen a base rental of $1,250, plus 10 percent of Bowls' profits, each month. The term is two years. Abby hires Deja to take and fill customers' orders at an hourly wage of $12.50, plus tips.
-Refer to Fact Pattern 29-1.Abby and Carmen are​

Accepted Answer

Abby and Carmen are not partners because Carmen does not have an ownership interest or management rights in Bowls. The lease agreement only requires Abby to pay Carmen a base rental and a percentage of profits, which does not indicate a partnership.

Question 16

Rosalee is a partner in Silver Dragon,a partnership consisting of the owners of a Chinese and American restaurant.Silver Dragon incurs debt for new dining tables and chairs.Rosalee is

Accepted Answer

Rosalee as a partner in a general partnership is personally liable to the full extent of the debt of the partnership. This means that her personal assets can be used to pay off the debt if the partnership is unable to do so. There is no limited liability protection in a general partnership. Therefore, option D is the correct answer.

Question 17

Nathalie and Olina do business as Profitable Properties,a real estate investment partnership.In acting on the firm's behalf in a deal with Quaint Village Mall,Nathalie takes advantage of an opportunity to make a secret profit on her own behalf.To her firm,Nathalie is

Accepted Answer

Nathalie is liable for breach of the duty of loyalty because she took advantage of an opportunity that belonged to the partnership for her own personal gain without informing her partner Olina. This action violates the fiduciary duty of loyalty that partners owe to each other, which requires them to act in the best interest of the partnership and to avoid any conflict of interest. Nathalie's actions can harm the partnership and undermine its integrity, so she will be held liable for breaching this duty.

Question 18

Marta is a partner in Kasper's Kleaning.When Marta dies her heirs are

Accepted Answer

Marta's heirs would be entitled to the value of her interest in Kasper's Kleaning, which would be determined either by a buyout or the sale of the business. As a partner, Marta had a percentage interest in the business, and her heirs would be entitled to that same percentage of the business's value. Option A is incorrect because Marta's interest in the business forms part of her estate, and her heirs would inherit that interest. Option B is incorrect because it assumes that Marta had a 50% interest in the business, which may not be the case. Option D is incorrect because it assumes that there are three partners in the business when the question doesn't provide that information.

Question 19

Sweet Selections is a general partnership that sells candy,cards and flowers.Sweet Selections has ten partners.Jill and Amy each have a 25 percent interest in the partnership.All the other members have a 10 percent interest.To pass a management decision

Accepted Answer

In a general partnership, management decisions are made by a majority of the partners. Therefore, in this case, a decision can be made if at least six out of the ten partners agree to it. Jill and Amy's 25 percent interest does not give them a veto power over the rest of the partners.

Question 20

Tom and Bill are partners in Tough Trucks Towing.James is not a partner.In dealing with Fred,James holds himself out to be a partner in Tough Trucks Towing and Fred contracts to have Tough Trucks Towing tow some vehicles for him.If Tough Trucks fails to tow the vehicles,a court may conclude that

Accepted Answer

James has held himself out to be a partner in Tough Trucks Towing, which is known as a partnership by estoppel. This means that James is liable to Fred in the same way as a partner would be. Even though James is not truly a partner, he is responsible for the actions of the business due to his representation. Therefore, if Tough Trucks fails to tow the vehicles, James can be held liable to Fred.

Quiz 29: Sole Proprietorships, partnerships, and Limited Liability Companies