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Exam 37: Partnerships and Limited Liability Partnerships

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Question 1

Multiple Choice

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Guy and Hanna do business as G-H Associates.If G-H is a partnership,it is governed by the Uniform Partnership Act

A) in the absence of an express agreement.
B) in the absence of an implied agreement.
C) only in the presence of an express agreement.
D) under all circumstances.

E) B) and C)
F) B) and D)

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Question 2

True/False

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In a general partnership,the partners are personally liable for the debts of the partnership.

A) True
B) False

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Question 3

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A partner's profit from a partnership is taxed as income to the firm.

International Exports,L.P.,is a limited partnership,with $100,000 in de?clared but unpaid profits.International's creditors include Friendly Credit Corporation for $5,000 and Gwen,one of International's limited partners,also for $5,000.When Harry,one of International's general partners,de?cides to retire,the other general partners vote to liquidate and dissolve the firm.The limited partners,who are not asked their opinions,want Interna?tional to continue in business and file a suit against the general partners to compel this result.Can the court order International to continue? If not,what is the priority of the distribution of International's assets on its dissolution?

Fact Pattern 37-1A (Questions A3-A4 apply) Desi starts up eSites,an Internet service,and leases office space in a building owned by Fred.The lease requires Desi to pay Fred a base rental of $1,250,plus 10 percent of eSites' profits,each month.The term is two years.Desi hires Gwen to work at eSites' tech support desk at an hourly wage of $12.50,plus a commis?sion of 10 percent of the prof?its.The term is also two years. -Refer to Fact Pattern 37-1A.Desi and Gwen are

Sally and Tom decide to go into business,selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm.The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties,but the agreement says nothing about the management of the firm or a division of profits.Without Sally's knowledge,Tom tells United Computer Products,Inc.,that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy.In the first year,e-Buy makes a profit of $50,000.What are the partners' rights with respect to the management of the firm? Is the partnership bound to the contract with United? Do the partners split the first year's profits? If so,how much is each entitled to?

Federal law permits a partnership to be treated as an entity in suits in federal courts.

Venture Capital,LP,is a limited partnership.Its limited partners include more than 150 sophisticated investors and investment professionals.A Venture limited partner loses his or her limited liability if he or she

Vasili is considering forms of business organization for Vasili's Designs,an ar?chitectural firm.An advantage of a limited liability partnership is that partners may be able to avoid personal liability for

Any event that makes its unlawful for a partnership to continue its business will result in dissolution.

Some states have passed laws prohibiting the withdrawal of limited partners from a limited partnership.

Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.

A sharing of profits from the ownership of property creates a presumption that a partnership exists.

Jack and Kyra are partners in Law Firm,LLP,a limited liability partnership.Jack supervises Kyra,who negligently fails to appear in court on behalf of Milo,a client.Liability to Milo rests with

Megan and Nicole do business as One World Realty.In acting on the firm's behalf in a deal with Property Acquisition Company,Megan fails to account for the profit.To her firm,Megan is

Clu,Dolf,and Elton do business as Fertile Valley Farm.Clu's relationship to the firm ends,but it continues to do business.This is

Sable and Rex agree while talking on the phone to form a partner?ship to deal in transfers of real property.Their partnership agreement is legally binding

An association cannot be a partnership without an express agreement.

Fact Pattern 37-1A (Questions A3-A4 apply) Desi starts up eSites,an Internet service,and leases office space in a building owned by Fred.The lease requires Desi to pay Fred a base rental of $1,250,plus 10 percent of eSites' profits,each month.The term is two years.Desi hires Gwen to work at eSites' tech support desk at an hourly wage of $12.50,plus a commis?sion of 10 percent of the prof?its.The term is also two years. -Refer to Fact Pattern 37-1A.Desi and Fred are

Fay is admitted to Global Associates,an existing partnership.A partnership debt incurred before the date of her admission comes due.Fay is