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Exam 23: Partnership Operation and Termination

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Question 1

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If no provision relating to the distribution of profits and losses is stated in the partnership agreement, then under RUPA Section 401b), "each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner's share of profits."

A) True
B) False

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Question 2

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Which of the following duties of the partners, that they owe each other, relates to the duty to act within the bounds of the authority or trust that has been extended?

A) Duty of embezzlement
B) Duty of obedience
C) Duty of derivative action
D) Duty of replevin
E) Duty to lost volume

F) A) and B)
G) All of the above

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Question 3

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Under both Uniform Partnership Act UPA) and Revised Uniform Partnership Act RUPA), contract liability of the partners is joint and several.

Abby, Igor, Ted, and Tim were operating a restaurant in partnership. Ted received a letter from his university offering him an opportunity to teach the other students. Since, Ted always wanted to teach, he left the partnership. The partnership firm wanted to announce that Ted was no longer their partner since Ted had been handling a lot of purchases and dealing with some big customers. Which of the following statements could they file in order to do so?

The _____ states that a business entity does not itself owe taxes on income; it only acts as a pass-through for its members to receive income.

State atleast five duties that partners owe each other and five rights that each partner possesses.

Under the Uniform Partnership Act, in which of the following cases would a dissolution occur?

Timothy, Reuben, and John, three brothers, work in a partnership firm that specializes in organizing events for people. John's friend Sam visited their place of business and made some suggestions to John for the next event that he was handling. Timothy and Reuben were however, out on a business trip when Sam visited their place. John out of gratuity got Sam a gift out of the business account and asked him to join the partnership. This, at present, could not be possible because of the doctrine of _____.

_____ is the highest duty of good faith and trust, imposed on partners as to each other and the firm.

The Revised Uniform Partnership Act RUPA) uses the term _____ in lieu of the Uniform Partnership Act UPA) term "dissolution."

Ralph, a partner, doing partnership along with Gilbert and Vicky, during the course of the partnership, pays a sum of $4,000 to one of the suppliers out of his personal account. The partnership firm will have to pay back this amount to Ralph as per the partner's right to _____.

The freedom to select new partners is absolute.

State the ten different causes of dissociation.

Ross, Molly, and Dave had opened a partnership firm. Dave mortgaged his interest in the partnership in return for a $10,000 loan from the bank. Under this circumstance, which of the following will hold true as per the Revised Uniform Partnership Act RUPA) ?

The Uniform Partnership Act and the Revised Uniform Partnership Act do not dictate what relations among partners must be.

As per the Section 401d) of the Revised Uniform Partnership Act RUPA), a partner is entitled for remuneration for all the services performed by him for the partnership.

In the case of a partnership, _____ refers to finishing the business at hand, settling accounts, and terminating the firm.

As per the Revised Uniform Partnership Act RUPA), a partnership agreement may eliminate the duty of loyalty so as long as that is not manifestly unreasonable.

For tortuous acts, the partners are said to be jointly and severally liable under both Uniform Partnership Act UPA) and Revised Uniform Partnership Act RUPA), and the plaintiff may separately sue one or more partners.

The partnership firm is not liable, if a single partner disposes of the firm's goodwill.