Question 1

Fact Pattern 37-1B 
Brad,Carlos,and Dora are general partners in Eastside Physicians,a medical clinic.Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.
-Refer to Fact Pattern 37-1B.Brad,Carlos,and Dora decide to admit Faisal as a new partner in Eastside Physicians.Faisal's liability for partnership debts incurred before his admission is

Accepted Answer

Faisal's liability for partnership debts incurred before his admission is limited to his capital contribution to the firm. This is because, as a new partner, Faisal cannot be held liable for debts incurred by the partnership before his admission, unless he agrees to assume such liabilities in the partnership agreements. Furthermore, Faisal's liability as a general partner in Eastside Physicians will be limited to his capital contribution to the partnership, unless he personally guarantees partnership debts or engages in other conduct that exposes his personal assets to partnership creditors.

Question 2

Ryder and Sergei are partners in Timberline Gear,which sells mountain- and rock-climbing equipment.Ryder manages the business.Unless the partnership agreement states otherwise,Ryder is

Accepted Answer

In a partnership, unless otherwise agreed upon in the partnership agreement, partners are not entitled to compensation for their services beyond their share of the profits.

Question 3

Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without specifying a duration.This partnership is terminable

Accepted Answer

Since the partnership agreement does not specify a duration, it is considered an at-will partnership and can be terminated at any time by either partner.

Question 4

Bo and Clancy decide to do business as Deck & Patio Awnings.To be a partnership,this association can result from an agreement that is

Accepted Answer

A partnership agreement can be formed through oral, written or implied conduct, so option C is the best choice. Option A and D limit the formation of the partnership to only one method of agreement while option B excludes a possible way of forming a partnership through expressed agreement.

Question 5

Fact Pattern 37-1B 
Brad,Carlos,and Dora are general partners in Eastside Physicians,a medical clinic.Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.
-Refer to Fact Pattern 37-1B.Brad's dissociation from the firm results in

Accepted Answer

When a partner dissociates from a partnership, the partnership may either buy out the dissociating partner's interest or terminate the partnership's business. In this case, Brad's dissociation would result in the partnership buying out his interest, as stated in their agreement. The other options are not relevant to the situation.

Question 6

Rick and Sandy are limited partners in Total Profit Enterprises,a lim?ited part?ner?ship.To avoid personal liability for partnership obligations,they must not

Accepted Answer

Limited partners are not allowed to participate in the management of the firm. This is to avoid personal liability for partnership obligations. Acquiring an interest in the firm, contributing property to the firm, and engaging in activities independent of the firm's business may be allowed as long as they do not participate in the management. However, the best choice in this case is D.

Question 7

Free Range Western Ranch is a family limited liability partnership.All of the partners must be

Accepted Answer

A family limited liability partnership can include natural persons or persons acting as fiduciaries for natural persons.

Question 8

Ben,who runs a livestock breeding business,owes the Circle C Ranch $40,000.Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid.Because of this agreement,the Circle C is

Accepted Answer

The Circle C Ranch is Ben's creditor because Ben owes them $40,000 and has agreed to pay them a percentage of his profits until the debt is paid. There is no indication that Circle C Ranch is involved in the business operations or shares in the profits beyond debt repayment, so they are not considered a partner.

Question 9

Genetic Innovations,LP,is a limited partnership.The partners sign an agreement purporting to state how the firm's profits and losses are to be di?vided.The profits and losses of the firm will be divided

Accepted Answer

In a limited partnership, the profits and losses are divided according to the agreement signed by the partners. This is one of the main advantages of a limited partnership as it allows the partners to customize their profit-sharing arrangement to suit their specific needs and preferences.

Question 10

Fact Pattern 37-1B 
Brad,Carlos,and Dora are general partners in Eastside Physicians,a medical clinic.Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.
-Refer to Fact Pattern 37-1B.Carlos's assignment of his interest in Eastside to General Credit Corporation results in

Accepted Answer

Carlos's assignment of his interest without the consent of the other partners constitutes a breach of the partnership agreement, resulting in his wrongful dissociation from the partnership. This makes him liable for any damages suffered by the partnership as a result of his dissociation. However, it does not automatically terminate the legal existence of the partnership or make him liable for all of the partnership's debts.

Question 11

Bret is a general partner in Capitol Realty,LLLP,a limited liability lim?ited partnership,which cannot pay its debts.Bret is personally li?able for the debts

Accepted Answer

The answer of Bret is a general partner in Capitol...

Question 12

Mead,Nero,and Olen do business as Pipe & Stream Irrigation Services.After Mead's relationship to the firm ends,Nero and Olen agree to dis?continue the business.This is

Accepted Answer

Dissolution refers to the termination of a partnership or corporation. In this scenario, since Nero and Olen agree to discontinue the business after Mead's departure, it can be concluded that the business is being dissolved. The other choices (A, C, and D) do not accurately describe the situation.

Question 13

Trina and Uri do business as Value Gems.In acting on the firm's behalf in a deal with World Diamond Exchange,Trina recklessly exceeds what Value Gems can afford to pay,causing damage to the firm.Trina is

Accepted Answer

Trina breached the duty of care by acting recklessly and causing damage to the firm. She had a duty to act with reasonable care and skill in her dealings on behalf of the firm, and she failed to do so, causing financial harm to the firm.

Question 14

Cody is a partner in Derivative Investment Service (DIS).Cody can inspect

Accepted Answer

As a partner in DIS, Cody has a right to inspect all of the firm's books and records. This is a common right granted to partners in a partnership agreement.

Question 15

Tundi is a partner in YooHoo! Amusement,a new partnership.A YooHoo! debt comes due.Tundi is

Accepted Answer

As a partner in YooHoo! Amusement, Tundi is personally liable to the full extent of the debt. In a partnership, each partner is jointly and severally liable for the debts and obligations of the partnership, meaning that each partner can be held personally responsible for the full amount of the debt.

Question 16

Dunn and Etta are limited partners in Fancee Fashion Stores,a limited partner?ship.In terms of the firm's books,Dunn and Etta are entitled to

Accepted Answer

Limited partners in a partnership typically have the right to access the firm's books and records, similar to general partners, to ensure transparency and protect their investment.

Question 17

Hollister and Gladys do business as partners in Frothy Confections.For federal income tax purposes,Frothy Confections would be treated as

Accepted Answer

Partnerships are generally considered pass-through entities for federal income tax purposes, meaning that the partnership itself does not pay income tax. Instead, the partnership's income, deductions, credits, and other items are passed through to the individual partners, who report their share of these items on their personal income tax returns.

Question 18

Denise and Elke do business as Final Curtain Decorators.In most states,for purposes of holding title to property,this partnership would be treated as

Accepted Answer

The partnership of Denise and Elke would likely be treated as an entity for purposes of holding title to property. This means that the partnership would be able to own property in its own name, separate from the individual partners, and would be responsible for any debts or liabilities associated with the property.

Question 19

Connie,Drew,and Ellen are the general partners of Foreign Auto Repair,a lim?ited partner?ship.Connie dies.The partnership can

Accepted Answer

In a limited partnership, the death of a general partner can lead to dissolution unless the remaining partners agree to continue the business. If Drew and Ellen consent, the partnership can continue.

Question 20

Fact Pattern 37-1B 
Brad,Carlos,and Dora are general partners in Eastside Physicians,a medical clinic.Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.
-Refer to Fact Pattern 37-1B.The partners decide to dissolve Eastside.Dora collects and distributes the firm's assets.This results in

Accepted Answer

When Dora collects and distributes the firm's assets, it signifies the completion of the winding up/liquidation process, resulting in the termination of the firm's legal existence. The partners can no longer conduct business under the Eastside Physicians name after this point.

Quiz 37: A: Partnerships and Limited Liability Partnerships