Steps involved in Establishing Business Test 15

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Steps involved in Establishing Business Test 15

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Question 1
1 / -0

A partnership form of business organization will be more advantageous in operation as it has _______.

A
access to large amount of initial capital

B
limited liability

C
both a and b

D
none of the above

Solution

In a partnership firm of business organization there is an increased ability to raise funds as there is more than one owner and each member can contribute a sufficient amount of capital which is not possible in a sole trading business as it is difficult to raise funds quickly and sufficiently.
Question 2
1 / -0

For a minor to be admitted to benefits of partnership ________.

A
all the partners should agree

B
there should be at least $$2$$ major partners

C
minor can not be admitted in a partnership firm

D
both a and b

Solution

If a minor become a partner, all the members should give their consent as the minor won't be able to participate in the workings. However, he will be entitled to the benefits. In order to make a minor a partner, there should be at least two major member as a partner. A minor is also not liable for any debts.
Question 3
1 / -0

Partners are ____________ of the firm.

A
owners

B
employers

C
agents

D
none of the above

Solution

Partner is a representative of a partnership business. As a representative of a partnership firm, the partners should conduct business based on the the powers given to them. Partners are agents who may act on behalf of the firm.
Question 4
1 / -0

XYZ partnership firm is a partnership firm between A and B. C posed that he is a partner in XYZ and earned profits form the market. C will be regarded as ______.

A
holding out partner

B
dormant partner

C
nominal partner

D
none of the above

Solution

C will be regarded as a partner in profit. A partner in profit is a partner who shares in the profit only without being liable for the losses. He contributes capital to the firm but does not take part in the management of the business. He is liable to third parties like other partners. Such a partner is generally inactive but associated with his money and goodwill.
Hence, option D is correct.
Question 5
1 / -0

Which of the following are the rights of a partner in a partnership firm?
X. To take part in the conduct and management of the business.
Y. To receive remuneration for active working in the firm.
Z. To receive interest on the capital invested in the firm W. To receive share in the profit.
Which of the following is/are the correct options?

A
X and Y

B
X and Z

C
X and W

D
X, Z and W

Solution

X)Section $$12$$(b) - Every partner is bound to attend diligently to his duties in the conduct of the busines-section.
Y)Section $$13$$(a) A partner is not entitled to receive remuneration for taking part in the conduct of the business.
Z)Section $$13$$(c) Where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits.
W)Section $$13$$(b) The partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm.
Question 6
1 / -0

Partnership must arise from _______.

A
an agreement

B
operation of law

C
status

D
all of the above

Solution

Partnership agreement are written documents that explicitly detail the relationship between the business partners and their individual obligations and contributions to the partnership . Since partnership agreements should cover all possible business situations that could arise during the partnership's life, the documents are often complex.
legal counsel in drafting and reviewing the finished contract is generally recommended. If a partnership does not have a partnership agreement in place when it dissolves, the guidelines of the Uniform Partnership Act and various state laws will determine how the assets and debts of the partners distributed.
Question 7
1 / -0

S a partner in AB and Sons has transferred his interest in the firm to D. Is the transfer correct?

A
No

B
Yes

C
D will decide

D
Court will decide

Solution

According to Section $$29$$ of the Indian Partnership Act, $$1932$$ a partner may transfer his interest in the firm by sale, mortgage or change. The transfer may be absolute or partial. The transfer donot provide transfree to interfere in the working of the organization, he has the right to share of profit only.
Question 8
1 / -0

Each partner is __________.

A
required to contribute capital in the partnership firm

B
not required to necessarily contribute capital in the partnership firm

C
required to work in the partnership firm

D
none of the above

Solution

In partnership business, partners are to contribute capital to the firm, and the individual amount of such capital is determined by an agreement. However, it is not necessary for the partners to contribute capital in the partnership firm it is also not necessary that they are to contribute capital equally or in the profit-sharing ratio.
There are instances where partners contribute capital equally though they share profits unequally. It is also found that partners contribute capital unequally though they share profits equally.
Hence, option B is correct.
Question 9
1 / -0

A partner who is entitled to share in the profits of a partnership firm without being liable to the losses, is called _________.

A
partner of profits only

B
sleeping partner

C
active partner

D
dummy partner

Solution

A person who becomes a partner for sharing profits only is known as a partner in profits.
He contributes capital to the firm but does not take part in the management of the business. He is liable to third parties like other partners.
Hence, option A is correct.
Question 10
1 / -0

In which of the following cases a partnership firm is re-constituted?

A
Admission

B
Retirement

C
Death

D
All of the above

Solution

When the firm needs additional capital or managerial skills or both, the firm admits a new person as a partner of the firm. However, he is admitted into the firm with the consent of all the partners unless otherwise stated in the partnership deed. So in the admission of a partner, it brings change infirm.

On the retirement of a partner, there be withdrawal from the firm will bring about a change in the composition of partners along with a change in their relationship.

When a partner dies, like the retirement of a partner, it brings about a change in the composition of partners and in their mutual relationship because the remaining partners continue to run the firm with a new profit sharing ratio.
Hence, option D is correct.

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Steps involved in Establishing Business Test 15

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Steps involved in Establishing Business Test 15

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SHARING IS CARING

Question 1

access to large amount of initial capital

limited liability

both a and b

none of the above

Solution

Question 2

all the partners should agree

there should be at least $$2$$ major partners

minor can not be admitted in a partnership firm

both a and b

Solution

Question 3

owners

employers

agents

none of the above

Solution

Question 4

holding out partner

dormant partner

nominal partner

none of the above

Solution

Question 5

X and Y

X and Z

X and W

X, Z and W

Solution

Question 6

an agreement

operation of law

status

all of the above

Solution

Question 7

No

Yes

D will decide

Court will decide

Solution

Question 8

required to contribute capital in the partnership firm

not required to necessarily contribute capital in the partnership firm

required to work in the partnership firm

none of the above

Solution

Question 9

partner of profits only

sleeping partner

active partner

dummy partner

Solution

Question 10

Admission

Retirement

Death

All of the above

Solution

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