BL Chapter 30

A person who is entitled to receive a share of the profits of a partnership is prima facie a partner unless the payment is of:

- A debt to a creditor. - Rent to a landlord. - Wages to an employee.

A person who is not entitled to participate in the management of a partnership is generally:

- An individual partner's assignee. - An individual partner's judgment creditor. - A receiver for an individual partner's interest.

No person may become the member of a partnership without the consent of

- At least one partner. - Two or more partners. - A majority of the partners.

Under the RUPA, a partnership may be formed by two or more:

- Individuals. -Partnerships. - Corporations.

A partner has which of the following rights?

- Right to share in profits - Right to return of capital upon demand

Arthur breaches his fiduciary duty to the Main Street Partnership by usurping a partnership opportunity. As a result of his breach of this duty, the partnership suffered a loss of $10,000 and Arthur made a secret profit of $20,000.

Arthur must pay the firm the $20,000 secret profit and the $10,000 loss.

Which of the following forms of business organization is unaffected by the death, bankruptcy, or withdrawal of an owner?

Corporation

CPA: Which of the following is not necessary to create an express partnership?

Execution of a written partnership agreement

A partner may engage in one or more competing businesses.

False

A partner may not ordinarily inspect the books of the partnership unless a majority of partners permit such inspection.

False

A partner may withdraw his capital contribution without the consent of all the partners.

False

A partner who fails to use ordinary care and skill in discharging assigned duties will be personally liable to the partners for any resulting loss.

False

A partner who performs a disproportionate share of the partnership duties is entitled to a salary in addition to a share of the profits.

False

A partner's right to participate in the management of the partnership depends upon the size of that partner's capital contribution.

False

The RUPA provides that amounts owing to partners for capital contributions are to be paid first upon dissolution of a partnership.

False

The corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in ease of formation.

False

Unless otherwise agreed, a partner is entitled to interest on a capital contribution.

False

Unless otherwise agreed, partners bear losses equally even if profits are shared unequally.

False

Which of the following is a legal duty imposed upon partners in their relationship with one another?

Fiduciary duty

CPA: Blake, a partner in QVM, a general partnership, wishes to withdraw from the partnership and sell her interest to Nolan. All of the other partners in QVM have agreed to admit Nolan as a partner and to hold him harmless for the past, present, and future liabilities of QVM. As a result of Blake's withdrawal and Nolan's admission to the partnership, Nolan:

Has the right to participate in QVM's management.

Able and Baker are engaged in continuous transactions of buying and selling real estate over a period of time and are carrying on a business of trading in real estate. What are they?

Partnership

CPA: In a general partnership, the authorization of all partners is required for an individual partner to bind the partnership in a business transaction to:

Sell goodwill.

The fiduciary duty imposed upon partners requires which of the following?

That a partner not make a secret profit in connection with partnership business

CPA: A partnership agreement must be in writing if:

The partnership's purpose cannot be completed within one year of formation.

Which of the following is not characteristic of the legal entity theory of partnerships?

Title to real estate must be acquired by individual partners.

A limited partner is liable for the partnership debt only to the extent of her capital contribution.

True

A partner who wrongfully withdraws from the partnership is liable to the remaining partners for damages resulting from the breach of the partnership agreement.

True

A partner's transferable interest does not include his or her entire partnership interest. It only includes the partner's share of the partnership profits, losses, and distributions upon liquidation.

True

A partnership is an association of two or more persons to carry on as co-owners a business for profit.

True

A person may be a partner even though he has no authority to conduct the ordinary activities of the business.

True

Any one partner may be held liable for the entire indebtedness of the partnership.

True

Every partner owes a duty of good faith, fairness, and loyalty to the other partners.

True

Partners may agree that losses will be shared differently than profits are shared.

True

The corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in external liability for business debts.

True

When a partner sells his interest in the partnership, the buyer becomes a new partner.

True