0

Types, rights and duties of partners - class-XI

Attempted 0/93 Correct 0 Score 0

Dinesh becomes a partner in the firm by agreement but never takes active part in the conduct of the business of the firm, in this situation he is known as a ________.

  1. Dormant Partner

  2. Nominal Partner

  3. Sub-partner

  4. Ostensible Partner


Correct Option: A

Which of the following statements is true?

  1. Two or more companies cannot enter into a contract of partnership

  2. Two or more partnership firms can enter into a new contract of partnership

  3. A married woman can be a partner of her husband

  4. Two or more Joint Hindu Families cannot enter into a contract of partnership


Correct Option: C

Balu, Lalu and Kalu are partners in a firm. They admit Malu as a minor partner to the benefit of partnership. Within 6 months of his attaining majority, he fails to give a public notice of his intention that he has become a fullfledged partner. On the other hand all other partners refuse to take him as a partner. In this case, which of the following statement is correct ?

  1. Malu is not liable as a partner

  2. Malu can become a partner

  3. Public notice is not essential for a minor partner on attaining majority

  4. A suit may be filed by other partners for dissolution of the firm


Correct Option: B

A minor has some rights against his estate diving  the age in which he is minor they are ___________.

  1. defending a suit

  2. defending him in prosecution

  3. to meet his marriage expenses

  4. all of the above


Correct Option: C

Following persons can not be called partners ____________________.

  1. Minors

  2. Insolvents

  3. Co-owners without the agreement to carry in the business

  4. All of the above


Correct Option: D

At the time when a new partner enters, goodwill   __________________.

  1. belongs all partners, new and old

  2. belongs only to the new partner who is going to be admitted

  3. belongs only to the old partner who have credited it

  4. none of the above


Correct Option: C

A sub-partner is a person ____________.

  1. who is sharing the profits of some partner

  2. who does not invest and shares the profits

  3. who invests but does not work

  4.  who only gives his name for partnership


Correct Option: A

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

  1. holding out partner

  2. dormant partner

  3. nominal partner

  4. none of the above


Correct Option: D

When a minor attains majority, he is liable for _________.

  1. from the date of attaining majority

  2. all the liabilities

  3. only for liabilities which are dealt by him

  4. for all liabilities since the date of admission to the firm as a minor.


Correct Option: D
Explanation:
He is not personally liable to third parties for the debts of the firm, on attaining majority, if he continues as a partner, his liability will become unlimited with effect from the date of his original admission into the firm. When a minor becomes major then within 6 months of his attaining the majority he has to elect whether he wants to be a partner or not he may give a public notice regarding his wish to be a partner or not but if he fails to give any notice then he is deemed to be a partner.

Which one of the following can not be claimed as a matter of right by a partner?

  1. To have access to books of account

  2. To take part in the conduct of the business

  3. To share the profits

  4. To receive remuneration


Correct Option: D

A sub-partner is a person ___________.

  1. who is sharing the profits of some partner.

  2. who does not invest and shares the profits

  3. who invests but does not work

  4. a partner who only gives his name for partnership


Correct Option: A

A Minor in a Partnership is _________.

  1. personally liable

  2. having unlimited liability

  3. liable only when the firm is insolvent

  4. none of the above


Correct Option: D

A Partner who has not entered into a Partnership agreement and conducts or represents himself as a Partner in a Firm is called _________.

  1. sleeping partner

  2. partner by estoppel

  3. working partner

  4. sub-partner.


Correct Option: B

A person who represents himself to be a partner but in reality he is not so, is known as a __________.

  1. inactive partner

  2. partner by estoppel

  3. Partner by default

  4. legal partner


Correct Option: B

Holding out partner is based on the principle of _______.

  1. protecting public interest

  2. Estoppel

  3. both a) & b)

  4. all of the above


Correct Option: B

A Nominal partner gets _______.

  1. no share in profits

  2. equal share in profits

  3. share in profits proportionate to*contribution

  4. none of the above


Correct Option: A

A introduces B to C as a Partner in his business. B, in fact, was not a Partner but he did not deny the statement. C advanced a loan to A. A could not repay the loan. C can hold B responsible for the repayment of loan because __________.

  1. B is a Sleeping Partner

  2. B is a Sub-Partner

  3. B is a Dormant Partner

  4. B is a Partner by Estoppel.


Correct Option: D

Dormant partner ______________.

  1. never takes part in business activities.

  2. is not liable for any act done by other partners.

  3. will not share losses of the firm.

  4. existence in partnership is invalid.


Correct Option: A

Retiring Partner continues to be liable for acts of the Firm done __________.

  1. upto the date of admission of a new Partner.

  2. upto the date of giving public notice of retirement.

  3. upto the close of the financial year in which he retires.

  4. all of the above.


Correct Option: B

For the acts of the Firm ________.

  1. minor is personally liable.

  2. minor's share is liable.

  3. guardian is personally liable.

  4. there is no liability at all for or on behalf of the minor.


Correct Option: B

A Retiring Partner is entitled to Profits of the Firm?

  1. Upto $31^{st}$ March

  2. When last accounts is made up

  3. Up to retirement date

  4. Not entitled to any Profit.


Correct Option: C

Retiring Partner may be discharged from liability to any third party for acts of Firm done before his retirement by ________.

  1. an agreement made with such third party and the Partners of reconstituted Firm

  2. implied from the course of dealing between the third party and reconstituted Firm after he had knowledge of the retirement

  3. either (a) or (b)

  4. both (a) and (b).


Correct Option: C

In case of Partnership at Will, Notice of intention to dissolve the Firm may be served by ___________.

  1. sleeping partners only

  2. any of the working partners

  3. any of the partners

  4. majority of the partners.


Correct Option: C

When a Partner is expelled otherwise than in good faith, it is ______.

  1. generally valid

  2. valid vis-a-vis third parties

  3. in restraint of trade

  4. null and void.


Correct Option: D

Loss arising out of Partners' insolvency shall be made up by ___________.

  1. that Partners' estate

  2. that Partners' Legal Heirs

  3. the Firm itself

  4. the Solvent Partners.


Correct Option: D

Mission and Vision statements are NOT commonly used to__________.

  1. Guide management's thinking on strategic issues, especially during times of significant change

  2. Create wider linkages with customers suppliers and alliance partners

  3. Help establish a framework for ethical behaviour

  4. Inspire employees to work more productively by providing focus and common goals


Correct Option: B

Persons who have entered into partnership with one another are called individually __________________.

  1. Firm

  2. Co-owner

  3. Firm name

  4. Partner


Correct Option: D

The private property of a partner should be used to ________.

  1. Pay his private debts first and if there is any surplus it can be used to pay firms liabilities

  2. Pay firms liabilities first and if there is any surplus it can be used to pay private debts

  3. (A) and (B)

  4. (A) or (B)


Correct Option: C

Which of the following is not a form of organisation?

  1. Partnership

  2. Company

  3. Partners

  4. Sole Proprietorship


Correct Option: C
Explanation:

Partners are the members who come together to form partnership. They are not the form of organisation, They are just the members of the organisation.

Which of the following statement is incorrect?

  1. The partnership comes into existence only by an agreement

  2. A person who received the profits is always partner

  3. The true test of partnership is the mutual agency i.e., agency relationship among partners

  4. A person who receives the profits is not necessarily a partner


Correct Option: B

Which of the following people cannot be called partners?

  1. Minors

  2. Insolvents

  3. Co-owners without the agreement to carry on the business

  4. All of the above


Correct Option: D
Explanation:

Indian partnership Act , provides that though a minor cannot be a partner in a firm , but with the consent of all the partners for the time but, he may be admitted to the benefits of partnership by an agreement executed through his guardian with the other partners.

Insolvency means a person who is not able to pay it's debts . So he cannot be a partner of a partnership firm. No member can be partner without the agreement between a co-owners.

Partners are ____________ of the firm.

  1. owners

  2. employers

  3. agents

  4. none of the above


Correct Option: C
Explanation:

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.

A ____________ partner is like an undisclosed principal.

  1. sleeping

  2. active

  3. nominal

  4. sub-partner


Correct Option: A
Explanation:

A sleeping or dormant partner is one who is a partner but whose name does not appear in any way as a partner and who is not known to the outside world as a partner. He has no duties to perform but has the right of access to the books of accounts which he can examine.

The members of partnership firm are individually called as ________.

  1. director

  2. investor

  3. partner

  4. manager


Correct Option: C
Explanation:

Persons who have entered into partnership with one another to carry on a business are individually called "partners". But the liability of partners with regard to its business is just like a proprietorship, is not limited to their share in business but also personal properties of the partners are at stake.

For a minor to be admitted to a partnership firm _________.

  1. all the partners should agree

  2. there should be $2$ major partners and than a minor can be admitted

  3. minor can not be admitted in a partnership firm

  4. both a and b


Correct Option: D
Explanation:

Indian Partnership Act, provides that though a minor cannot be a partner in a firm,but with the consent of all the partners for the time being, he may be admitted to the benefits of partnership by an agreement executed through his guardian with the other partners . 

       A minor can only be admitted to the benefits of a partnership if there are already 2 major partners, as a contract cannot take place between 2 minors. In simple words, there should be a partnership between 2 major partners before a minor can be admitted to its benefits.

A sub-partner is a person __________.

  1. who is sharing the profits of some partner

  2. who does not invest and shares the profits

  3. who invests but does not work

  4. a partner who only gives his name for partnership


Correct Option: A
Explanation:

When a partner enters into a contract with a third party to share his profit, the third party is called a sub partner. " The right to receive profits and bear losses becomes the asset of the sub partnership. A sub partnership which is in the receipt of the share of profit of a partner is the main partnership, has to be deemed to be a partner in the main partnership for the limited purpose of section 10(2-A) of the Income Tax act ".

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 ______.

  1. holding out partner

  2. dormant partner

  3. nominal partner

  4. none of the above


Correct Option: D
Explanation:

C will be regarded as partner in profit . A partner in profit is a partner who shares in the profit only without being liable of the losses. He contributes capital to the firm but does not take part in the management of the business . He is liable to the third parties like other partners . Such a partner is generally inactive but associated with his money and goodwill.

Any partner who invests in the business but does not take active part in the business is ___________.

  1. secret partner

  2. sleeping partner

  3. active partner

  4. nominal partner


Correct Option: B
Explanation:

A sleeping or dormant partner is one who is reality a partner but whose name does not appear in any way as a partner and who is not known to the outside world as a partner. He is liable to third parties if he is subsequently discovered by them. 

He has no duties to perform but has the right of access to the books of accounts which he can examine and copy. 
As a dormant partner he has no duty to perform,a firm is not dissolved on his insanity or permanent incapacity. He contributes capital and shares profits or losses in agreed ratio.

Each partner is __________.

  1. required to contribute capital in the partnership firm

  2. not required to necessarily contribute capital in the partnership firm

  3. requiredto work in the partnership firm

  4. none of the above


Correct Option: B
Explanation:

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.

Which type of partner is not personally liable?

  1. Active

  2. Dormant

  3. Nominal

  4. Minor


Correct Option: D
Explanation:

A minor cannot be a  full fleged partner in the partnership firm , he is not personally liable for the debts of the third party. He is only admited for profit . He can be admiited only by consent of all partners.

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

  1. partner is profits only

  2. sleeping partner

  3. active partner

  4. dummy partner


Correct Option: A
Explanation:

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 the third parties like other partners.

When a minor attains majority, he is liable for ___________.

  1. the date of attaining majority

  2. all the liabilities

  3. only for liabilities which are dealt by him

  4.  all liabilities since the date of admission to the firm as a minor


Correct Option: D
Explanation:

He is not personally liable to third parties for the debts of the firm, on attaining majority, if he continues as a partner, his liability will become unlimited with effect from the date of his original admission into the firm. When a minor becomes major then within $6$ months of his attaining the majority he has to elect whether he wants to be a partner or not he may give a public notice regarding his wish to be a partner or not but if he fails to give any notice then he is deemed to be a partner.

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

  1. partner in profits only

  2. sleeping partner

  3. active partner

  4. dummy partner


Correct Option: A
Explanation:

Partners in profit, is a partner who contributes in the capital , who dont share losses but only comes in the share for profit.

A person whose behaviour arouses misunderstanding that he is a partner in the firm but actually he is not,is called __________.

  1. nominal partner

  2. dormant partner

  3. ostensible partner

  4. partner by estoppel.


Correct Option: D
Explanation:

Partner by Estoppel or holding out - If person styles the character of a partner in a business before a third party (outsiders) by words or in writing or by his act, he is called a partner by estoppel. The third party mistaking him as a partner in the business advances loans on his creditability, that person would be personally responsible for the liability attaching to the position of a partner.

Which type of partners is not personally liable?

  1. Active

  2. Dormant

  3. Nominal

  4. Minor


Correct Option: D
Explanation:

Partnership arises from contract and a minor is not competent to enter into contract. Therefore, strictly speaking, a minor cannot be a full-fledged partners. But with the consent of all the partners he can be admitted into partnership for benefits only. He is not personally liable to third parties for the debts of the firm.

At the time when a new partner enters, Good will _________________________.

  1. belongs to all partners, new and old

  2. belongs only to the new partner who is going to be admitted.

  3. belongs only to the old partner who have credited it

  4. none of the above


Correct Option: C

If the behavior of a person shows that he is a partner in a firm (when actually he is not), such a person is known as _________.

  1. Nominal partner

  2. Sleeping partner

  3. Sub-partner

  4. Partner by estoppel


Correct Option: D

Towards goodwill a new partner at the time of admission contributed ___________________.

  1. in cash

  2. does not pay cash

  3. may or may not pay cash for good will

  4. none of these


Correct Option: C

For a minor to be admitted to a partnership firm _____________.

  1. all the partners should agree

  2. there should be $2$ major partners

  3. minor can not be admitted in a partnership firm

  4. both a & b


Correct Option: D

As per partnership Act Minor on becoming major _______________.

  1. liability becomes unlimited

  2. liability becomes unlimited only when he accepts the partnership

  3. he has only rights and no liabilities

  4. none of the above


Correct Option: B

A minor has some rights against his estate diving the age in which he is minor they are ___________.

  1. defending a suit

  2. defending him in prosecution

  3. to meet his marriage expenses

  4. all of the above.


Correct Option: C

New incoming partner pays his share of goodwill in cash, and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners ____________.

  1. as their old profit ratio

  2. according to new ratio

  3. according to sacrifice ratio

  4. none of these


Correct Option: A

Agency by Estoppel means ____________.

  1. a person is being posed by the person as his agent

  2. a person himself believes that he is the agent of some other person.

  3. a person who becomes the agent because of some kind of necessary requirement.

  4. none of the above.


Correct Option: A

The _________ is responsible for doing all acts, matters and things as are required to be done by LLP as per the Act.

  1. Designated Partner

  2. Active Partner

  3. Designated Director

  4. All the partners


Correct Option: A

Robert is a Sleeping Partner in a Firm. He detected a mistake in the accounts of the Firm. So he wants to check the complete accounts of the Firm. But the other Partners objected it. Is the objection is valid?

  1. Void, their objection is wrong.

  2. Valid, they can object.

  3. Valid, they have the right not to give the accounts to the Sleeping Partner.

  4. None of the above.


Correct Option: A

Co-ownership is not always the result of an agreement; it may arise ________.

  1. By the operation of law

  2. From status

  3. By the operation of law or from status

  4. None of the above


Correct Option: C
Explanation:

Co-ownership refers to the division of ownership of something into two or more heads. This act can be passed through an agreement between the co-owners or even it can be done through the operation of law which will be bound on all the co-owners.

Identify which of the following statement is true and which is false?
(i) As relations of partners inter se are that of agency, no consideration is required to create the partnership,
(ii) Partnership and Joint Hindu Family both are created by status.
(iii) There is no restriction as to maximum number of members for HUF.
(iv) Registration is also required for HUF.
Select the correct answer from the options given.

  1. (i)-True, (ii)-False, (iii)-True, (iv)-False

  2. (i)-False, (ii)-True, (iii)-False, (iv)-True

  3. (i)-True, (ii)-False, (iii)-False, (iv)-True

  4. (i)-False, (ii)-True, (iii)-True, (iv)-False


Correct Option: A
Explanation:

(i) According to the partnership act, 1932, it is not necessary for the partners to register under any type of act. 

(ii) Both partnership and joint hindu family business is created by the relations between the members of the business. 
(iii) In joint hindu family business, there is no restriction for the maximum number of members in the business. 
(iv) In joint hindu family business registration depends upon the members of the business as there is no compulsory registration under this business by any law. 

A change in the nature of the business can only be brought about by the consent of __________.

  1. Majority partners

  2. All the partners

  3. Any two partners

  4. Any five partners


Correct Option: B
Explanation:

 A partnership basically refers to the contract between two or more people who have agreed to carry on certain business in order to achieve common goals. Therefore, any change in the nature of the business can be brought forward only by the consent of all the partners mentioned in the partnership deed. 

How you will classify partner who do not invest or participate in the management of the firm but only give their name to the business or firm?

  1. Active or working partner

  2. Sleeping or dormant partner

  3. Nominal partner

  4. Partner in profits only


Correct Option: C
Explanation:

A partnership basically refers to the contract between two or more people who have agreed to carry on certain business in order to achieve common goals. 

According to the Partnership Act, Nominal partners are the partners who do not invest their money into the business and have no share in the profit or losses but they just give their name as the partner for their goodwill in the business.

A introduces B to C as a partner in his business. B, in fact, was not a partner but he did not deny the statement. C advanced a loan to A. A could not repay the loan. C can hold B responsible for the repayment of loan because _________________.

  1. B is a sleeping partner

  2. B is a sub-partner

  3. B is a dormant partner

  4. B is a partner by estoppel


Correct Option: D
Explanation:
According to the Partnership Act, a partner by estoppel refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm and taking advantage of the goodwill of the firm. These kind of partners are liable to all the third parties arose due to them. Therefore, B is a partner by estoppel. 

A person, who, by words spoken or written or conduct represents himself or knowingly permits himself to be represented as a partner in the firm is called _______________.

  1. Sleeping partner

  2. Working partner

  3. Sub-partner

  4. Partner by estoppel


Correct Option: D
Explanation:
According to the Partnership Act, a partner by estoppel refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm and taking advantage of the goodwill of the firm. These kind of partners are liable to all the third parties arose due to them. 

Which of the following partner can retire without giving public notice?

  1. Active partner

  2. Sleeping or dormant partner

  3. Nominal partner

  4. Partner in profits only


Correct Option: B
Explanation:

According to the Partnership Act, Sleeping or dormant partner are the partners who invest their money into the business and share the profit or losses but they do not participate in the functioning and management of the business. These partners can retire without giving a public notice to other partners. 

If the behaviour of a person arouses misunderstanding that he is a partner in a firm(when actually he is not), such a person is estopped from later on denying the liabilities for the acts of the firm. Such person is called ________ and is liable to all third parties.

  1. Sleeping partner

  2. Partner by estoppel

  3. Working partner

  4. Sub-partner


Correct Option: B
Explanation:

According to the Partnership Act, a partner by estoppel refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm and taking advantage of the goodwill of the firm. These kind of partners are liable to all the third parties arose due to them. 

A partner who has not entered into a partnership agreement and conducts or represents himself as a partner in a firm is called _____________.

  1. Sleeping partner

  2. Working partner

  3. Sub-partner

  4. Partner by holding out


Correct Option: D
Explanation:
According to the Partnership Act, a partner by holding out refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm who has not yet entered into the partnership agreement to take the advantage of the goodwill of the firm.

A, B & C are partners in a firm. A introduces D to X as a partner in business. D, in fact, was not a partner in the firm's business. D did not deny this statement. X advanced a loan of Rs. $20$ lakhs to the firm. On firm's failure to repay the loan X wants to hold D responsible for the repayment of the above loan. Referring to the provisions of the Indian Partnership Act, $1932$ decide whether X would succeed in recovering the loan from D.

  1. No. D is not liable

  2. A has to repay the loan

  3. Yes. D is liable as a partner by holding out

  4. None of the above


Correct Option: C
Explanation:
According to the Partnership Act, 1932, a partner by holding out refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm who has not yet entered into the partnership agreement to take the advantage of the goodwill of the firm. These kind of partners are liable to all the third parties arose due to them. Therefore, Rohit is also liable as a partner by holding out. 

When the minor elects not to become a partner, his rights and liabilities _________.

  1. Continue to be those of a minor up to the date of giving public notice

  2. Are the same as that of all other partner

  3. Become ineffective since the partnership is invalid

  4. None of the above


Correct Option: A
Explanation:

According to the Partnership Act, 1932 a minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firms loss. 

A minor has to give a public notice whether he wants to be admitted in the partnership firm or not within the six months on his attaining maturity or obtaining knowledge of his admission as a partner. 
If a minor elects not to be a partner then he will be not be regarded as a partner after the date of giving public notice.

When the minor elects not to become a partner, his share is not liable for any acts of the firm done _________.

  1. After his admission to benefits of partnership

  2. After the date of giving public notice

  3. After the date of attaining majority

  4. After the date of dissolution of firm


Correct Option: B
Explanation:
According to the Partnership Act, 1932 a minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firms loss. A minor has to give a public notice whether he wants to be admitted in the partnership firm or not within the six months on his attaining maturity or obtaining knowledge of his admission as a partner. If a minor elects not to be a partner then he will be not be regarded as a partner after the date of giving public notice.

For admitting a minor into the benefits of the partnership, which of the following is required?

  1. Consent of majority partners

  2. Consent of parent or guardian

  3. Consent of all the partners

  4. Consent of $3/4$th partners


Correct Option: C
Explanation:

A minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firm's loss. The minor can even inspect the books of accounts of the firm. A minor can be admitted as a partner to claim the benefits of the business only by the consent of all the other partners. 

Rohit is not a partner in a particular firm. But, he represents himself or knowingly permits himself to be represented as a partner of that particular firm to Sanjay, who on the faith of such a representation gives credit to the firm. Is Rohit liable as a partner in the firm?

  1. No. Rohit is not liable

  2. No. Sanjay has to bear the loss

  3. Yes. Rohit is liable as a partner by holding out

  4. None of the above


Correct Option: C
Explanation:
According to the Partnership Act, a partner by holding out refers  to the partner who verbally or in written or through some conduct represents himself or knowingly permits himself to be represented as a partner in a firm who has not yet entered into the partnership agreement to take the advantage of the goodwill of the firm. These kind of partners are liable to all the third parties arose due to them. Therefore, Rohit is also liable as a partner by holding out. 

Where a minor on attaining majority elects to become a partner, he does not becomes personally liable as other partners to the third parties for all the acts of the firm done since he was admitted to the benefits of partnership.

  1. Correct

  2. Incorrect

  3. Partly correct

  4. Partly incorrect


Correct Option: B
Explanation:
According to the Partnership Act, 1932 a minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firms loss. 
A minor has to give a public notice whether he wants to be admitted in the partnership firm or not within the six months on his attaining maturity or obtaining knowledge of his admission as a partner. 
If a minor elects himself as a partner then he will become liable of all the acts of the firm and other partners after the date of giving public notice.

A minor is personally liable for the debts of the firm ________________.

  1. Correct

  2. Incorrect

  3. Partly correct

  4. Partly incorrect


Correct Option: B
Explanation:

A minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firm's loss. 

The minor can even inspect the books of accounts of the firm.

If minor becomes or elects to become a partner, his position will be ____________________________.

  1. His rights and liabilities will be similar to those of a full-fledged partner

  2. He will be personally liable for all the acts of the firm, done since he was first admitted to the benefits of the partnership

  3. His share of profits and property remains the same as was before, unless altered by agreement

  4. All of the above


Correct Option: D
Explanation:

According to the Partnership Act, 1932 a minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and he will have no share in the firms loss. A minor has to give a public notice whether he wants to be admitted in the partnership firm or not within the six months on his attaining maturity or obtaining knowledge of his admission as a partner. If a minor elects himself as a partner then he will become liable of all the acts of the firm and other partners after the date of giving public notice. 

Which of the following is NOT covered by general duties of partners?

  1. To carry on the business of the firm to the greatest common advantage of the firm

  2. To be just and faithful to each other

  3. To arrange for audit of accounts of the firm

  4. To keep and render true, proper and correct accounts of the partnership


Correct Option: C
Explanation:

In a partnership business, the partners cannot arrange for the audit of the accounts of the firm that is done by the Accounts authority of that company. 

Which of the following is not a right of partner?

  1. Every partner has a right to continue in the partnership and not to be expelled from it

  2. A partner has power to act in an emergency for protecting the firm from loss

  3. Every partner is entitled to share in the profits equally

  4. Every partner is entitled to the introduction of a new partner into the firm without consent other partner


Correct Option: D
Explanation:

According to the Partnership Act 1932, a partner has no right for any introduction as new partner into the firm with the consent of other partners. 

Every partner is bound to attend _________ to his duties, in the conduct of the business.

  1. Systematically

  2. Diligently

  3. Sincerely

  4. Effectively


Correct Option: B
Explanation:

In a partnership firm, the partners who perform all the functions related to the conduct of the business are required to perform all such business with utter responsibility. 

___________ can assign or transfer his partnership interest to any other person, so as to make him a partner in the business.

  1. No partner

  2. Every partner

  3. Working partner

  4. Nominal partner


Correct Option: A
Explanation:

According to the partnership Act 1932, no partner can assign or transfer their partnership to any third person to make him the partner of the business. 

Which of the following statement is correct in relation to assignment of profit by partner?

  1. To assignee will have right to ask for the accounts or to interfere in the management of the business

  2. The assignee would be entitled only to share the actual profits from the firm

  3. On dissolution of the firm, the assignee will be entitled to the share of the assets and also to accounts but only from the date of dissolution

  4. All of the above


Correct Option: C
Explanation:

When the firm is dissolved then the assignee distributes the asset and liability to all the partners who are entitled of the distribution from the date of the dissolution of the firm. 

Which of the following statement is incorrect?

  1. Every partner must be just and faithful to other partners

  2. A partner is bound to keep and render true, proper and correct accounts of the partnership

  3. A partner can compete with the firm, without the consent of the other partners

  4. To carry on the business of the firm to the greatest common advantage


Correct Option: C
Explanation:

A partner in a Partnership agreement of a firm can make secret profits without the consent of other partners only from some other business and not from the business of the partnership firm. Even the business should not compete with the business of the partnership firm. If the partner wants to carry on such a business then they can do so with the consent of all other partners. 

In the absence of an agreement to the contrary, every partner is bound to share losses ______________.

  1. Equally

  2. In proportion to capital

  3. In proportion to their private assets

  4. $50\%$ loss equally and balance $50\%$ in their capital ratio


Correct Option: A
Explanation:

According to the Partnership Act 1932, every partner has an equal right to participate in the conduct and management of the business and has an equal share in the profit or loss of the firm, mentioned otherwise. 

Property of the firm shall be held by use of the partners __________.

  1. Exclusively for business purposes

  2. For business purposes as well as private purposes of the partners

  3. For the private purposes of the partners

  4. For charitable purposes


Correct Option: A
Explanation:

A partnership basically refers to the contract between two or more people who have agreed to carry on certain business in order to achieve common goals. In the absence of any partnership deed, all the property, rights and interest contribute by the individual partners, all the property acquired in the course of the business and the goodwill of the business is considered as the property of the firm. These properties should be used by all the partners exclusively for business purpose only.

For loss caused to the firm by his fraud in the conduct of the business, every partner shall __________.

  1. Indemnify the firm

  2. Indemnify the other partner

  3. Indemnify all the retiring partners

  4. Indemnify only to working partners


Correct Option: A
Explanation:
According to the Partnership Act 1932, the liability of the partners are unlimited and they are bound to compensate with the loss of the firm that is caused by the fraud in the conduct of business.

Every partner is an agent of the firm and of other partners for __________________.

  1. The purpose of the management of the firm

  2. The purpose of other partners

  3. The purpose of liability to third parties

  4. The purpose of the business of the firm


Correct Option: D

Every partner is bound to attend ______ to his duties in the conduct of the business.

  1. Systematically

  2. Diligently

  3. Sincerely

  4. Effectively


Correct Option: B
Explanation:

Every partner is bound to attend diligently to his duties in the conduct of the business. Every partner is an agent of the partnership firm. Individuals have to enter into a contract to become partners. The business in the partnership firm can be carred on by all the partners or any one of them acting for all.

A partner who contributed capital in the Finn but does not actively participate in the working of the business is called ______________.

  1. Active Partner

  2. Sleeping Partner

  3. Sub-Partner

  4. Nominal Partner


Correct Option: B
Explanation:

A partner who contributed capital in the Finn but does not actively participate in the working of the business is called sleeping partner. Sleeping partner does not get involved in the management of the business. Only capital is contributed by the sleeping partner in a partnership entity.

- Hide questions