BUL 5810 COMPREHENSIVE ANSWERS AND
QUESTIONS SET A+
✔✔Absent an agreement otherwise, upon dissolution, a partner is entitled to which of
the following
after payment of partnership creditors?
(A) A share of profits in proportion to capital contribution
(B) A share of profits based on the degree of participation in management
(C) Under the UPA, repayment of his capital contribution during the winding up of the
firm
(D) The UPA requires that the partners have an agreement or else they must seek a
court order
distributing the remaining assets - ✔✔(C) Under the UPA, repayment of his capital
contribution during the winding up of the firm
✔✔White, Gray, and Greene enter into a contract to form a partnership, but the contract
says
nothing about the sharing of profits and losses. Which of the following will take place?
(A) Profits and losses will be shared in a ratio based on the dollar amount of their capital
investments.
(B) Profits will be shared equally; losses will be absorbed based on dollar amount of
capital
investment.
(C) Profits will be based on amount of time each partner spends working for the firm;
losses will be
shared equally.
(D) Profits and losses will be shared equally. - ✔✔(D) Profits and losses will be shared
equally.
✔✔The UPA grants each partner the right to an account whenever:
(A) his partners wrongfully exclude him from the partnership business.
(B) a partner makes a profit in violation of his fiduciary duty.
(C) circumstances render it just and reasonable.
,(D) All of these are reasons a partner may demand an account. - ✔✔(D) All of these are
reasons a parter may demand an account.
✔✔A distribution in a partnership may be:
(A) a payment made to compensate a partner for services rendered to the partnership.
(B) a division of profits.
(C) repayment of a loan to a partner.
(D) All of these are types of distributions in partnerships. - ✔✔(D) All of these are types
of distributions in partnerships.
✔✔Under the RUPA, a partner must manage the partnership affairs without ____
negligence to
avoid violation of the duty of care.
(A) ordinary
(B) culpable
(C) gross
(D) any - ✔✔(C) gross
✔✔In deciding whether property owned by a partner before formation of the partnership
and used
in the business is a capital contribution that belongs to the firm, a court will consider
which of the
following?
(A) Whether the property was improved with partnership funds
(B) Whether the property was carried on the books of the partnership as an asset
(C) Admissions or declarations of the partners
(D) All of these would be considered. - ✔✔(D) All of these would be considered.
✔✔Which of the following expresses the right one has to choose her partners?
(A) Partnership by estoppel
(B) Delectus personae
(C) Entity theory
(D) Fiduciary relationship - ✔✔(B) Delectus personae
✔✔Which of the following would be the most convincing evidence of a partnership?
(A) An agreement to share in the management of a business
(B) Agreements to share gross returns
(C) An agreement to share losses
(D) An agreement to pay a firm manager a percentage of the profits for his salary -
✔✔(C) An agreement to share losses
✔✔General Widget partnership assets amount to $34,000 after liquidation. Frank,
Gene, and Hank,
equal partners, each contributed $3,000 into the capital pool at the inception of the
business. Gene
, later loaned the business $5,000. They owe $23,000 to creditors for inventory. What will
Gene get in
distribution, assuming there is no agreement on the distribution of profits?
(A) $7,000
(B) $5,000
(C) $8,000
(D) $11,000 - ✔✔(A) $7,000
✔✔The principal legal duties imposed upon partners in their relations with one another
include:
(A) the fiduciary duty or the duty of loyalty.
(B) the duty to compensate other partners for their time and efforts spent on partnership
business.
(C) a duty to devote full time and expertise to the partnership.
(D) a duty to vote for candidates that will help the business. - ✔✔(A) the fiduciary duty
or the duty of loyalty.
✔✔Clark and David are partners. Clark has contributed $25,000. David has contributed
only his
time and skill. On dissolution, after all firm debts are paid, $20,000 in assets remains.
Which of the
following is NOT correct?
(A) The $20,000 remaining after payment is profit that will be equally divided.
(B) The partnership has sustained a loss of $5,000.
(C) David is not entitled to any part of the $20,000.
(D) David has no obligation to reimburse Clark for any loss. - ✔✔(A) The $20,000
remaining after payment is profit that will be equally divided.
✔✔The Oak Grove Partnership decided it would buy personal computers for use by
each partner.
Unknown to the other partners, Cromwell, a partner, had an ownership interest in a
computer store
and thought he could get the computers for the partnership at the best price because of
his inside
position. He did, in fact, obtain eight computers at only $150 above the manufacturer's
price, which
was $250 less than the next lowest bid for each computer. What consequence?
(A) Because Cromwell did not tell his partners of his inside position with the computer
store, there
will be no sale.
(B) Since Cromwell obtained the lowest price available, the deal will go through.
(C) Cromwell will have to give his part of the sales profits to the partnership.
(D) Cromwell will have to rescind the contract and go with the next highest bidder. -
✔✔C) Cromwell will have to give his part of the sales profits to the partnership.
QUESTIONS SET A+
✔✔Absent an agreement otherwise, upon dissolution, a partner is entitled to which of
the following
after payment of partnership creditors?
(A) A share of profits in proportion to capital contribution
(B) A share of profits based on the degree of participation in management
(C) Under the UPA, repayment of his capital contribution during the winding up of the
firm
(D) The UPA requires that the partners have an agreement or else they must seek a
court order
distributing the remaining assets - ✔✔(C) Under the UPA, repayment of his capital
contribution during the winding up of the firm
✔✔White, Gray, and Greene enter into a contract to form a partnership, but the contract
says
nothing about the sharing of profits and losses. Which of the following will take place?
(A) Profits and losses will be shared in a ratio based on the dollar amount of their capital
investments.
(B) Profits will be shared equally; losses will be absorbed based on dollar amount of
capital
investment.
(C) Profits will be based on amount of time each partner spends working for the firm;
losses will be
shared equally.
(D) Profits and losses will be shared equally. - ✔✔(D) Profits and losses will be shared
equally.
✔✔The UPA grants each partner the right to an account whenever:
(A) his partners wrongfully exclude him from the partnership business.
(B) a partner makes a profit in violation of his fiduciary duty.
(C) circumstances render it just and reasonable.
,(D) All of these are reasons a partner may demand an account. - ✔✔(D) All of these are
reasons a parter may demand an account.
✔✔A distribution in a partnership may be:
(A) a payment made to compensate a partner for services rendered to the partnership.
(B) a division of profits.
(C) repayment of a loan to a partner.
(D) All of these are types of distributions in partnerships. - ✔✔(D) All of these are types
of distributions in partnerships.
✔✔Under the RUPA, a partner must manage the partnership affairs without ____
negligence to
avoid violation of the duty of care.
(A) ordinary
(B) culpable
(C) gross
(D) any - ✔✔(C) gross
✔✔In deciding whether property owned by a partner before formation of the partnership
and used
in the business is a capital contribution that belongs to the firm, a court will consider
which of the
following?
(A) Whether the property was improved with partnership funds
(B) Whether the property was carried on the books of the partnership as an asset
(C) Admissions or declarations of the partners
(D) All of these would be considered. - ✔✔(D) All of these would be considered.
✔✔Which of the following expresses the right one has to choose her partners?
(A) Partnership by estoppel
(B) Delectus personae
(C) Entity theory
(D) Fiduciary relationship - ✔✔(B) Delectus personae
✔✔Which of the following would be the most convincing evidence of a partnership?
(A) An agreement to share in the management of a business
(B) Agreements to share gross returns
(C) An agreement to share losses
(D) An agreement to pay a firm manager a percentage of the profits for his salary -
✔✔(C) An agreement to share losses
✔✔General Widget partnership assets amount to $34,000 after liquidation. Frank,
Gene, and Hank,
equal partners, each contributed $3,000 into the capital pool at the inception of the
business. Gene
, later loaned the business $5,000. They owe $23,000 to creditors for inventory. What will
Gene get in
distribution, assuming there is no agreement on the distribution of profits?
(A) $7,000
(B) $5,000
(C) $8,000
(D) $11,000 - ✔✔(A) $7,000
✔✔The principal legal duties imposed upon partners in their relations with one another
include:
(A) the fiduciary duty or the duty of loyalty.
(B) the duty to compensate other partners for their time and efforts spent on partnership
business.
(C) a duty to devote full time and expertise to the partnership.
(D) a duty to vote for candidates that will help the business. - ✔✔(A) the fiduciary duty
or the duty of loyalty.
✔✔Clark and David are partners. Clark has contributed $25,000. David has contributed
only his
time and skill. On dissolution, after all firm debts are paid, $20,000 in assets remains.
Which of the
following is NOT correct?
(A) The $20,000 remaining after payment is profit that will be equally divided.
(B) The partnership has sustained a loss of $5,000.
(C) David is not entitled to any part of the $20,000.
(D) David has no obligation to reimburse Clark for any loss. - ✔✔(A) The $20,000
remaining after payment is profit that will be equally divided.
✔✔The Oak Grove Partnership decided it would buy personal computers for use by
each partner.
Unknown to the other partners, Cromwell, a partner, had an ownership interest in a
computer store
and thought he could get the computers for the partnership at the best price because of
his inside
position. He did, in fact, obtain eight computers at only $150 above the manufacturer's
price, which
was $250 less than the next lowest bid for each computer. What consequence?
(A) Because Cromwell did not tell his partners of his inside position with the computer
store, there
will be no sale.
(B) Since Cromwell obtained the lowest price available, the deal will go through.
(C) Cromwell will have to give his part of the sales profits to the partnership.
(D) Cromwell will have to rescind the contract and go with the next highest bidder. -
✔✔C) Cromwell will have to give his part of the sales profits to the partnership.
