law2 lopez quizzes
law2 lopez quizzes
1. Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of holding title to property, this partnership would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
2. Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is
a. Ben’s creditor and partner.
b. Ben’s creditor only.
c. Ben’s partner only.
d. neither Ben’s creditor nor his partner.
3. Bo and Clancy decide to do business as Deck & Patio Awnings. To be a partnership, this association can result from an agreement that is
a. express, but not from an agreement that is implied.
b. implied, but not from an agreement that is express.
c. oral, written, or implied by conduct.
d. written, but not from an agreement that is oral or implied.
4. Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as
a. a pass-through entity.
b. a natural person.
c. a tax-paying entity.
d. a partnership by estoppel.
5. Parker and Oscar sign a partnership agreement to do business as “Parker’s Plumbing” without specifying a duration. This partnership is terminable
a. at any time by either partner.
b. only after a reasonable term.
c. only if Parker dissociates from the firm.
d. only if Oscar dissociates from the firm.
answer: a PAGE: 721 TYPE: N
NAT: AACSB Reflective AICPA Legal
6. Cody is a partner in Derivative Investment Service (DIS). Cody can inspect
a. all of DIS’s books and records.
b. DIS’s books and records only as the firm’s management permits.
c. DIS’s books and records only for a reasonable purpose.
d. DIS’s books and records relating to Cody’s capital contribution only.
7. Ryder and Sergei are partners in Timberline Gear, which sells mountain- and rock-climbing equipment. Ryder manages the business. Unless the partnership agreement states otherwise, Ryder is
a. entitled to compensation in proportion to his effect on the business.
b. entitled to compensation in proportion to his effort.
c. entitled to compensation in proportion to his capital contribution.
d. not entitled to compensation.
8. Trina and Uri do business as Value Gems. In acting on the firm’s behalf in a deal with World Diamond Exchange, Trina recklessly exceeds what Value Gems can afford to pay, causing damage to the firm. Trina is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
9. Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes due. Tundi is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Fact Pattern (Questions 10 - 13 below apply)
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.
10. Refer to Fact Pattern above. Carlos’s assignment of his interest in Eastside to General Credit Corporation results in
a. nothing with respect to Carlos or Eastside.
b. the automatic termination of Eastside’s legal existence.
c. Carlos’s liability for all of Eastside’s debts.
d. Carlos’s wrongful dissociation and liability for any damages.
11. Refer to Fact Pattern above. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal’s liability for partnership debts incurred before his admission is
a. limited to his capital contribution to the firm.
b. limited to his personal assets.
c. nothing.
d. unlimited.
12. Refer to Fact Pattern above. Brad’s dissociation from the firm results in
a. the automatic termination of the firm’s legal existence.
b. the partnership’s buyout of Brad’s interest in the firm.
c. the immediate maturity of all partnership debts.
d. the temporary suspension of the partnership’s business.
13. Refer to Fact Pattern above. The partners decide to dissolve Eastside. Dora collects and distributes the firm’s assets. This results in
a. nothing with respect to the firm’s existence.
b. the continuation of the firm’s business.
c. the termination of the firm’s legal existence.
d. the temporary suspension of the firm’s business.
14. Mead, Nero, and Olen do business as Pipe & Stream Irrigation Services. After Mead’s relationship to the firm ends, Nero and Olen agree to discontinue the business. This is
a. dissociation.
b. dissolution.
c. gross negligence.
d. simple misconduct.
15. Free Range Western Ranch is a family limited liability partnership. All of the partners must be
a. natural persons only.
b. natural persons or persons acting as fiduciaries for natural persons.
c. persons acting as fiduciaries for natural persons only.
d. related.
16. Rick and Sandy are limited partners in Total Profit Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm’s business.
d. participate in the firm’s management.
17. Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm’s books, Dunn and Etta are entitled to
a. access in proportion to their participation in management of the firm.
b. access to the parts that directly relate to their capital contributions.
c. no access.
d. total access.
18. Genetic Innovations, LP, is a limited partnership. The partners sign an agreement purporting to state how the firm’s profits and losses are to be divided. The profits and losses of the firm will be divided
a. according to the agreement.
b. equally, despite the agreement.
c. in proportion to capital contributions, despite the agreement.
d. in proportion to each partner’s participation in the firm’s management, despite the agreement.
19. Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited partnership. Connie dies. The partnership can
a. continue only after a distribution of its assets.
b. continue only as a general partnership.
c. continue only if Drew and Ellen consent.
d. not continue because Connie’s death dissolves the firm.
20. Bret is a general partner in Capitol Realty, LLLP, a limited liability limited partnership, which cannot pay its debts. Bret is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.
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