Partnerships (Introduction) Part I

Question 1

The characteristic of unlimited liability is a disadvantage on the point of view of the creditor. True or False?

Answer 1

False

Question 2

Which of the following is NOT a characteristic of all partnerships?

A. Taxable entity
B. Co-ownership of property
C. Mutual Agency
D. Voluntary Association

Answer 2

A. Taxable entity. This is a characteristic of a corporation.

Question 3

Access to more capital is an advantage of a partnership over a sole proprietorship. True or False?

Answer 3

True

Question 4

A capitalist partner cannot be a limited partner. True or False?

Answer 4

False. They can.

Question 5

An ostensible partner is one who is known to the public that he is a partner, and has active management participation. True or False?

Answer 5

True

Question 6

A dormant partner is one who is not known to the public that he is a partner, but is actively participating in the management of the partnership.

Answer 6

False. They are not known to the public and is not actively participating in the management of the partnership.

Question 7

An industrial partner cannot be a general partner. True or False?

Answer 7

False. They can.

Question 8

It is easier to change ownership in a corporation than in a partnership. True or False?

Answer 8

True

Question 9

The partners have the following rights, except one:

A. Share in profits
B. Receive net assets at liquidation point
C. Co-manage the business
D. Transfer ownership at will

Answer 9

D. Transfer ownership at will

Question 10

A partnership has an indefinite life like a corporation. True or False?

Answer 10

False. A partnership has a limited life but with unlimited liability.

Question 11

What is the definition of a partnership?

Answer 11

A contract binding two or more person to contribute money, property or industry with the intention of dividing the profits among themselves.

Question 12

What is a juridical personality?

Answer 12

The partnership is separate and distinct from each of the partners. It can act as a person in itself as a partnership instead of on behalf of the partner.

Question 13

When does the legal relationship in a partnership exists?

Answer 13

The moment of the execution of the contract.

Question 14

Contracts cannot be oral, it must always have a physical copy. True or False?

Answer 14

False. Contracts can be written or in oral form.

Question 15

A partnership cannot be considered juridical to own and acquire property, incur obligations, and press civil/criminal charges against people or businesses. True or False?

Answer 15

False. The nature of a partnership is that it has a juridical personality.

Question 16

Partnerships are governed by the civil code. True or False?

Answer 16

True

Question 17

A partnership has limited liabilities. With that, creditors cannot seek after the partners’ personal assets. True or False?

Answer 17

False. A partnership operates under the concept of unlimited liability, thus, creditors can go after the partners’ personal assets.

Question 18

All partners, including industrial partners, are liable. True or False?

Answer 18

True

Question 19

What is mutual agency?

Answer 19

Partners can represent on behalf of the partnership.

Question 20

In a mutual agency characteristic, if a partner is not in favor of the acts of one partner on the behalf of the partnership, the decision lies on the partner who is not in favor. True or False?

Answer 20

False. It will be decided by the majority. In the case of a tie, the matter shall be decided by the partner with the biggest contribution/share/investment/equity.

Question 21

What are the characteristics of a partnership?

Answer 21

1. Mutual Agency
2. Limited Life
3. Unlimited Liability
4. Co-ownership of contributed assets
5. Mutual participation in profits
6. Income Taxation