Tag: partnership 1 - meaning, definition, characteristics and kinds

Questions Related to partnership 1 - meaning, definition, characteristics and kinds

In order for a firm to successfully carry out price discrimination which of the following conditions must hold?
I. The fine should not face a downward sloping demand curve
II. The firm must have a market power
III. Buyers with differing demand must be separable.
IV. The firm must have motives beyond profit maximization.
V. The firm must able to prevent the re-sale of its product.

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

  1. I, III & V only

  2. III & IV only

  3. l & IV only

  4. II, III & V only

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Correct Option: A

A partnership may be dissolved __________________.

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

  1. On death of partner

  2. On completion of work or venture

  3. On expiry of term

  4. All the above

Show answer
Correct Option: D
Explanation:
Dissolution of partnership implies not only a complete closure or termination of partnership business but it also includes any change in the existing agreement among the partners due to a change in the number of partners. A partnership may be dissolved under following conditions:
a) on death of partner
b) On completion of work or venture
c) On expiry of term.

Which of the advantages of LLP states that one partner is not responsible or liable for another partners misconduct or negligence.

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

  1. Flexible agreement

  2. Separate legal entity

  3. Fewer compliance requirements

  4. Easy to wind-up

Show answer
Correct Option: B
Explanation:

Separate legal entity of LLP states that one partner is not responsible or liable for another partners misconduct or negligence. Limited Liability Partnership can be defined as form of partnership where the partner or investor's liability is limited to the amount invested in the company.

Identify the disadvantage of LLP.

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

  1. An LLP can be structured in such a way that one partner has more rights than another.

  2. An LLP is much easier and cheaper to run than a private limited company.

  3. The partners are free to draft the agreement as they please, with regard to their rights and duties.

  4. Non-compliance fines can escalate to Rs. 5 lakh for a single year.

Show answer
Correct Option: A,D
Explanation:

Limited Liability Partnership can be defined as form of partnership where the partner or investor's liability is limited to the amount invested in the company. LLP combines the advantages of both the Company and Partnership into a single form of organization. Disadvantages of LLP are as follows:a) An LLP can be structured in such a way that one partner has more rights than another.

b) Non-compliance fines can escalate to Rs. 5 lakh for a single year.

The concept of _____ restricts the amount of money a person risks to what he invests in a business enterprise.

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

  1. Expert assistance

  2. Unlimited liability

  3. Separate legal existence

  4. Limited liability

Show answer
Correct Option: D
Explanation:

The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise. It means that the liability of each person is limited to the extent of his/her share in the business. Limited liability in simple terms, means that 'you risk what you put in'.

An LLP has partners unlike a company which has shareholders.

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

  1. True

  2. False

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Correct Option: A
Explanation:

A LLP has partners unlike a company which has shareholders- this is a true statement. Limited Liability Partnership can be defined as form of partnership where the partner or investor's liability is limited to the amount invested in the company. LLP combines the advantages of both the Company and Partnership into a single form of organization.

The best way to explain limited liability is this :- 'you risk what you put in'.

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

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

The best way to explain limited liability is this: 'you risk what you put in'. The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise. It means that the liability of each person is limited to the extent of his/her share in the business.

The partnership may come to an end due to the _________.

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

  1. death of a partner

  2. insolvency of partner

  3. by giving notice

  4. all of the above

Show answer
Correct Option: D
Explanation:

According to the section 39 of the Indian Partnership Act, 1932, the dissolution of the partnership firm may happen in the following cases:

  1. Death of the partner.
  2. Insolvency of the partner.
  3. By giving notice.

Whenever 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 affected

  4. reorganized

Show answer
Correct Option: A
Explanation:

When a new partner joins a partnership the old partnership is dissolved and a new partnership is formed . Accounting for admission of new partner depends on the nature of arrangement between the existing partners and the new partners. And the new partner contributes according to the agreement.

Partnership at will can be dissolved by any partner by ________.

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

  1. communicating with the principal

  2. not allowed

  3. giving due notice to other partners

  4. all of the above

Show answer
Correct Option: C
Explanation:

If a partnership is at will, it can be dissolved by any partner giving a notice to other partners. The notice for dissolution must be in writing. The dissolution will be effective from the date of the notice. In case no date is mentioned in the notice, and then it will be dissolved from the date of receipt of notice. A notice once given can not be withdrawn without the consent of all the partners.