Tag: elements of business

Questions Related to elements of business

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?

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. X and Y

  2. X and Z

  3. X and W

  4. X, Z and W

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Correct Option: D
Explanation:

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.

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

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. Admission

  2. Retirement

  3. Death

  4. All of the above

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Correct Option: D
Explanation:

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 admission of a partner it bring change in firm.


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


When a partner dies, like 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 new profit sharing ratio.

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

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. No

  2. Yes

  3. D will decide

  4. Court will decide

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Correct Option: B
Explanation:

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.

The court may not dissolve the firm in case of ____________.

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. insanity of a partner

  2. permanent in capability of a partner

  3. retirement of a partner

  4. misconduct of a partner

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Correct Option: C
Explanation:

At the suit of a partner, the Court may dissolve a firm on any of the following grounds, namely:-

(a) that a partner has become of unsound mind, in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner.
(b) that a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner.
(c) that a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the carrying on of the business regard being had to the nature of the business.
(d) that a partner, other than the partner suing, wilfully or persistently commits breach of agreements relating to the management of the affairs of the firm of the conduct of its business; or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him.
(e) that a partner, other than the partner suing, has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of rule $49$ of Order XXI of the First Schedule to the Code of Civil Procedure, $1908$, or has allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as arrears of land revenue due by the partner.


Which of the following cases, a partnership firm may be dissolved?
X. On the death of a partner
Y. On the insolvency of a partner
Z. On the retirement of a partner
Correct option is __________.

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. X and Y

  2. X and Z

  3. Y and Z

  4. X, Y and Z

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Correct Option: D

Whoever a new partner is added to the firm the firm is ____________.

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. dissolved

  2. continued

  3. not effected

  4. reorganized

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Correct Option: A

Where a partner cannot be clear his debts on dissolution, the other partners must clear these debts in the following manner ___________________.

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. Partnership profit/loss sharing ratio

  2. Debts are shared equally

  3. In the ratio of their last agreed capital balance

  4. Both a & b

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Correct Option: C

Which one of the following is NOT an effective way to terminate an offer?

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. Rejection by the offeree.

  2. Failure of a conditions precedent.

  3. Revoking the offer following acceptance.

  4. Lapse of reasonable time

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Correct Option: C

LLP shall have atleast ___ Partners

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. 2

  2. 4

  3. 3

  4. 5

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Correct Option: A
Explanation:
An LLP need to have atleast two designated partners (DPs) who was responsible for working of an LLP. The designated partners need to have DIN or DPIN. So if the LLP has 3 partners out of which 2 are DPs, each one of the DPs needs to have a DIN / DPIN. To start an LLP, you require at least two partners.

N and Z, the co-owners of a house, use the house as a hotel managed either by themselves or by a duly appointed manager for their common profit. Is there a partnership relation between the parties?

elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

  1. Yes

  2. No

  3. Partly yes

  4. Can't say

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Correct Option: B
Explanation:

If N and Z, the co-owners of the house, use the house for hotel management purpose then it will not be considered as any partnership relation because there is no contract between them in any manner, either it is verbal or written regarding the partnership agreement.