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Accounting for Partnership: Basic Concepts Test 52

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Accounting for Partnership: Basic Concepts Test 52
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  • Question 1
    1 / -0
    The partnership relation exists when __________. 
    Solution
    The basic elements that tag any business a partnership are business done by partners along with partners being majors above 18 years.
    In option A, joint owner do earns proifit with a partner but that profit is not due to any business it is because of sale of a property. Thus, there is no partnership relation.
    In opton B, the person is receiving his share of profit but there is no information about his business and partner anf thus it won't be a partnership relation.
    In option C, partner B is a minor below 18 years hence he is not a legal partner with A. Thus, again it can't be a aprtnership.
    In option D, both the partners A and B are carrying on the business of clothes aand they share profits too. Thus, this relation can be called as a partnership since no information is provided about their ages.
    Hence, there is a partnership relation in option D only.

  • Question 2
    1 / -0
    Registration of a firm is ___________. 
    Solution
    Registration of the firm is optional. Registration isn't mandatory but there are many disadvantages of not registering a firm. 
    An unregistered firm cannot sue partners or the partners cannot sue the firm, the firm cannot sue third parties, there is no proof in case of disagreement related to profit sharing ratio hence, difficult to solve disputes with no proof in the court of law.
  • Question 3
    1 / -0
    The maximum number of partners in a firm carrying on banking business cannot exceed: 
  • Question 4
    1 / -0
    Which of the following is correct?
    Solution
    Amongst all statements the third one is correct because a business would be called a partnership only when the partners belong to a single firm only. People joining from different firms would not be a partnership.
    The first option is incorrect because a partnership cannot have a separate legal entity because partners only are the owners of firm. Like any other joint stock it doesn't have shareeholders as its owner.
    The second option is also incorrect because when two firms join together it is not a partnership rather it is combining of two different companies to form a single company.
  • Question 5
    1 / -0
    Mutual Agency is ________. 
    Solution
    Mutual agency is a right to every partner of firm to represent the partnership agreement and normal business operations under any situation. It is basically a motivation for every partner to stick to that firm only.
    Hence, it can be called as conclusive evidence of partnership because partners are the ones to represent their partnership firm.
  • Question 6
    1 / -0
    The real test of partnership is __________. 
    Solution
    Partnership firms are usually called people as business done by two or more persons and is very easy to run. But real test of any partnership is carried when a single partner or a group of persons take responsiblity to runt he business. It is difficult for a single partner as he is the only person to manage every task and problems faced by a group of partners is compatibility with each other to work peacefully.
  • Question 7
    1 / -0
    A firm _______. 
    Solution
    A partnership firm is all because of its partners. Without the partners there is no legal existence of firm because there is no one to run the business. Hence, a firm doesn't has it own existence, it is all due to its partners.
    Thus, other options apart from the second one are incorrect.
  • Question 8
    1 / -0
    The maximum number of partners allowed in a firm carrying on general business is _______. 
    Solution
    A business which is exempted from providing any kind of banking facility is a non-banking or general business.
    Companies act 2013 has laid down the rule for such business when it comes to partnership that maximum 20 partners can only enter into the business. Above this, an illegal tag would be put on the business of that firm and no one can question about this tag.
  • Question 9
    1 / -0
    A change in the nature of business of the firm may be made only with the consent of _________. 
    Solution
    A change in the nature of the business of the firm may be made only with the consent of all the partners. 
  • Question 10
    1 / -0
    A partnership at will may be dissolved by any partner by giving ________. 
    Solution
    A partnership  at will can be dissolved at any time without any liability on the partners by giving a notice in writing to all the other partners of his intention to dissolve the firm. A partnership at will is one which does not provide for how long the business will continue. It is basically a partnership where partners have not agreed to remain in partnership until a definite fixed term. 
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