Business Partnership Quiz

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  • 1/25 Questions

    It is the supreme authority in matters of management of the regular and business affairs of a corporation

    • Board of directors
    • Majority shareholders
    • Minority shareholders
    • None of the above
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About This Quiz

Here, we are bringing to you this "Business Partnership Quiz." A business has a lot of areas where you have to work upon to not just sustain but to grow your business. This quiz is based on the partnership and various other related aspects of a business. How business partnership works and rules and regulations related to it. Do you think you can pass? Well, try your luck here. Take this quiz and score well. Best of luck!

Business Partnership Quiz - Quiz

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  • 2. 

    Corporators in a stock corporation

    • Incorporators

    • Promoters

    • Members

    • Shareholders

    Correct Answer
    A. Shareholders
    Explanation
    Shareholders are the owners of a stock corporation. They hold shares in the company and have the right to vote on important matters, such as electing the board of directors and approving major corporate decisions. Unlike incorporators and promoters, who are involved in the initial formation of the corporation, shareholders can be individuals or other entities that have purchased shares in the company. Members, on the other hand, typically refer to individuals who are part of a different type of organization, such as a membership-based association or club. Therefore, shareholders is the most appropriate term to describe the corporators in a stock corporation.

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  • 3. 

    The partnership may come to an end due to the

    • Death of a partner

    • Insolvency of partner

    • The insanity of a partner

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The partnership may come to an end due to various reasons, including the insolvency of a partner, the insanity of a partner, or the death of a partner. In the case of insolvency, if a partner becomes unable to fulfill their financial obligations, it may lead to the dissolution of the partnership. Similarly, if a partner becomes mentally incapable of carrying out their duties, it can also result in the termination of the partnership. Additionally, the death of a partner can automatically dissolve the partnership, as it affects the continuity and functioning of the business. Therefore, any of these events can lead to the end of a partnership.

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  • 4. 

    In the absence of an agreement, profit and loss are divided by partners in the ratio of:

    • Capital

    • Equally

    • Time devoted by each partner

    • None of these

    Correct Answer
    A. Capital
    Explanation
    In the absence of an agreement, profit and loss are divided by partners in the ratio of their capital contributions. This means that the partners will receive a share of the profit or bear a share of the loss based on the amount of capital they have invested in the business. The partners with higher capital contributions will receive a larger share of the profit and will also bear a larger share of the loss, while partners with lower capital contributions will receive a smaller share of the profit and bear a smaller share of the loss.

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  • 5. 

     Which of the following results in the dissolution of a partnership?

    • The withdrawal of a partner from a partnership

    • The receipt of share in profit by an existing partner

    • The contribution of additional assets to the partnership by an existing partner.

    • The winding up of the partnership and distribution of remaining assets to partners.

    Correct Answer
    A. The withdrawal of a partner from a partnership
    Explanation
    When a partner withdraws from a partnership, it leads to the dissolution of the partnership. This is because a partnership is based on the agreement and participation of all partners. When one partner chooses to leave, it disrupts the balance and functioning of the partnership, resulting in its dissolution. The remaining partners may choose to continue the business or wind up the partnership and distribute the remaining assets among themselves.

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  • 6. 

    Loss on realization is distributed among partners:

    • According to the profit and loss ratio

    • According to capital contribution

    • As decided among them

    • None of the above

    Correct Answer
    A. According to the profit and loss ratio
    Explanation
    When a partnership firm is dissolved, any loss on realization is distributed among the partners according to their profit and loss ratio. This means that partners who have a higher share in the profits will also bear a higher share of the losses. This method ensures that the distribution is fair and reflects the partners' respective contributions to the partnership.

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  • 7. 

    Which of the following results in the dissolution of a partnership?

    • The receipt of share in profit by an existing partner

    • The withdrawal of a partner from a partnership

    • The contribution of additional assets to the partnership by an existing partner

    • The winding up of the partnership and the distribution of remaining assets to the partners.

    Correct Answer
    A. The withdrawal of a partner from a partnership
    Explanation
    When a partner withdraws from a partnership, it results in the dissolution of the partnership. This is because a partnership is an agreement between two or more individuals to carry on a business together, and when one partner leaves, the partnership can no longer continue in its original form. The remaining partners may choose to form a new partnership or dissolve the existing one and distribute the remaining assets among themselves.

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  • 8. 

    Persons who compose the corporation, whether as shareholders or members, are called

    • Corporators

    • Incorporators

    • Promoters

    • Subscribers

    • None of the above

    Correct Answer
    A. Corporators
    Explanation
    The correct answer is "corporators". In the context of a corporation, corporators are the individuals who form or establish the corporation. They can be shareholders or members of the corporation. The term "incorporators" is also sometimes used interchangeably with "corporators" to refer to the same group of individuals. "Promoters" are individuals who promote or initiate the formation of a corporation, but they may not necessarily be the same as the corporators. "Subscribers" typically refer to individuals who subscribe to or purchase shares or membership in a corporation. Therefore, the correct term for the persons who compose the corporation is "corporators".

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  • 9. 

    If a partner cannot clear his debts on dissolution, the other partners must clear these debts in the following manner:  

    • In the ratio of their last agreed capital balance

    • Partnership profit/loss sharing ratio

    • Debts are shared equally.

    • Debts should not be cleared by other partners

    Correct Answer
    A. Partnership profit/loss sharing ratio
    Explanation
    When a partner is unable to clear their debts on dissolution, the other partners are responsible for clearing these debts. The debts should be cleared in accordance with the partnership profit/loss sharing ratio. This means that each partner will contribute to the debt repayment based on their agreed share of profits and losses in the partnership. The answer states that the debts should not be cleared by other partners, indicating that the responsibility lies solely with the partners in proportion to their profit/loss sharing ratio.

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  • 10. 

    Right of the corporation to continue as a juridical entity for the period stated in the Articles of incorporation despite the death of any shareholder:

    • Right of succession

    • Right of pre-emption

    • Right of existence

    • None of the above

    Correct Answer
    A. Right of succession
    Explanation
    The correct answer is "right of succession." This refers to the legal right of a corporation to continue its existence even after the death of a shareholder. It means that the corporation can still operate and carry out its business activities as a separate legal entity, regardless of any changes in ownership due to the death of a shareholder.

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  • 11. 

    The arbitrary value assigned to a share of stock is called:

    • Market value

    • Par value

    • Liquidation value

    • Book value

    • None of the above

    Correct Answer
    A. Par value
    Explanation
    Par value is the arbitrary value assigned to a share of stock. It is a nominal value that is determined by the company and is printed on the stock certificate. Par value has no relation to the market value of the stock and is mainly used for accounting and legal purposes. It represents the minimum price at which a share can be issued and does not reflect the actual worth of the stock.

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  • 12. 

    In a partnership liquidation, the assets of the partnerships shall be applied first to

    • Those owing to outside creditors

    • Those owing to the partners with respect to their share of the profits

    • Those owing to the partners with respect to their capital contributions

    • Those owing to inside creditors in the form of loans or advances for business expenses by the partners

    Correct Answer
    A. Those owing to outside creditors
    Explanation
    In a partnership liquidation, the assets of the partnership are distributed in a specific order. The first priority is to pay off the debts owed to outside creditors. These are individuals or entities that have provided goods, services, or loans to the partnership but are not partners themselves. By prioritizing the payment of outside creditors, the partnership ensures that its obligations to external parties are fulfilled before distributing any remaining assets to the partners. This is important for maintaining the partnership's reputation and financial integrity.

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  • 13. 

    If a partner is insolvent, his personal properties shall last be distributed:

    • To the partners by way of additional contributions when the assets of the partnership were insufficient to settle all obligations

    • To partnership and separate creditors in the ratio of their loan exposures

    • To separate creditors

    • To partnership creditors

    Correct Answer
    A. To the partners by way of additional contributions when the assets of the partnership were insufficient to settle all obligations
    Explanation
    When a partner is insolvent, his personal properties will be distributed to the partners by way of additional contributions only if the assets of the partnership are not enough to settle all obligations. This means that the remaining partners will have to contribute more money or assets in order to cover the insolvent partner's share of the obligations. This distribution method ensures that all obligations are settled and the partnership can continue its operations.

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  • 14. 

    At the time of admission of a new partner, the firm is:

    • Dissolved

    • Continued

    • Not affected

    • Re-organized

    Correct Answer
    A. Dissolved
    Explanation
    When a new partner is admitted to a firm, it is dissolved. This means that the existing partnership is terminated, and a new partnership is formed with the inclusion of the new partner. The dissolution allows for the redistribution of assets, liabilities, and profits among the partners, and the creation of a new partnership agreement. Therefore, the admission of a new partner leads to the dissolution of the existing partnership.

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  • 15. 

    The advantage of a corporation from a partnership is

    • The death of a shareholder will not dissolve the corporation because of the power of succession.

    • Its management is centralized on the board of directors.

    • Shareholders have limited liability

    • Shareholders are not general agents of the business

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    A corporation has the advantage over a partnership because it has the power of succession, meaning that the death of a shareholder will not dissolve the corporation. Additionally, a corporation's management is centralized on the board of directors, providing a clear and efficient decision-making structure. Shareholders in a corporation also have limited liability, meaning their personal assets are protected in the event of the corporation's debts or legal issues. Lastly, shareholders in a corporation are not general agents of the business, which means they are not personally responsible for the corporation's actions or obligations. Therefore, all of the given options are advantages of a corporation over a partnership.

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  • 16. 

    Which of the following will not result in the dissolution of a partnership?

    • Incapacity of a partner

    • Negative capital balance of a partner

    • The bankruptcy of a partner

    • Admission of a new partner

    Correct Answer
    A. Negative capital balance of a partner
    Explanation
    The negative capital balance of a partner will not result in the dissolution of a partnership. A negative capital balance indicates that the partner has withdrawn more from the partnership than their share of profits, resulting in a deficit. While it may affect the partner's financial standing within the partnership, it does not automatically dissolve the partnership. Dissolution typically occurs due to events such as the death or incapacity of a partner, bankruptcy of a partner, or mutual agreement among the partners.

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  • 17. 

    A partnership is liquidating, and one of the partner's capital accounts has a deficit balance. What should happen?

    • The deficit balance should be removed from the accounting records, and the remaining partners would share in any additional profits.

    • The partner with the deficit should contribute enough personal assets to eliminate the deficit balance.

    • The partner with the highest capital balance should allocate enough dollars to eliminate the deficit balance.

    • The other partners should contribute personal assets to eliminate the deficit balance.

    Correct Answer
    A. The partner with the deficit should contribute enough personal assets to eliminate the deficit balance.
    Explanation
    In a partnership liquidation, if one partner's capital account has a deficit balance, it means that partner owes more to the partnership than their capital contribution. To rectify this, the partner with the deficit should contribute enough personal assets to cover the deficit and eliminate the negative balance. This ensures that all partners' capital accounts reflect their actual contributions and liabilities.

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  • 18. 

    In a partnership liquidation, the assets of the partnerships shall be applied lastly to

    • Those owing to outside creditors

    • Those owing to the partners with respect to their share of the profits

    • Those owing to the partners with respect to their capital contributions

    • Those owing to inside creditors in the form of loans or advances for business expenses by the partners

    Correct Answer
    A. Those owing to the partners with respect to their share of the profits
    Explanation
    In a partnership liquidation, the assets of the partnership are distributed to various parties in a specific order. The correct answer states that the assets shall be applied lastly to those owing to the partners with respect to their share of the profits. This means that after all outside creditors and partners' capital contributions have been paid, any remaining assets will be distributed to the partners based on their respective share of the profits. This ensures that the partners receive their rightful portion of the profits before any remaining assets are distributed to inside creditors.

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  • 19. 

    Accounting2 instructor?(wag nio ng tingnan sa fb ung tama!) BE HONEST KAHIT DITO LANG :)

    • Ms. Rachel Anne M. Dela Cruz

    • Ms. Rachel Grace M. Dela Cruz

    • Ms. Rachelle Anne M. Dela Cruz

    • Ms. Rachelle Grace M. Dela Cruz

    Correct Answer
    A. Ms. Rachel Grace M. Dela Cruz
    Explanation
    The correct answer is Ms. Rachel Grace M. Dela Cruz.

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  • 20. 

    No par value share can not be issued:

    • For less than P5.00

    • With preference as to assets or as to dividends

    • Without being fully paid

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    No par value shares cannot be issued for less than P5.00 because they do not have a specified minimum value. They also cannot have preferences as to assets or dividends because they do not have a stated value or fixed dividend rate. Additionally, they cannot be issued without being fully paid because there is no par value to determine the amount that needs to be paid for each share. Therefore, all of the given options are correct explanations for why no par value shares cannot be issued.

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  • 21. 

    Refers to an equitable right of shareholders to subscribe to newly issued shares of the corporation in proportion to their present shares in order to maintain the equity in their surplus as well as proportionate standing in the corporation.

    • Right to redemption

    • Pre-emptive right

    • Right to be sued

    • Concept of corporate entity

    Correct Answer
    A. Pre-emptive right
    Explanation
    A pre-emptive right refers to the right of shareholders to maintain their proportionate ownership in a corporation by subscribing to newly issued shares before they are offered to the public. This right allows shareholders to protect their equity in the company and ensures that their standing and control within the corporation remains proportional to their existing shares. It is an equitable measure that prevents dilution of existing shareholders' ownership and maintains fairness in the distribution of newly issued shares.

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  • 22. 

    Who has the right to vote(Corporation)?

    • Shareholders-common shares

    • Shareholders-preferred share

    • Shareholders-common and preferred shares

    • None of the above

    Correct Answer
    A. Shareholders-common shares
    Explanation
    In a corporation, the right to vote is typically given to shareholders who hold common shares. Common shares represent ownership in the company and typically come with voting rights. Shareholders who hold preferred shares may have certain financial benefits, but they may not have the right to vote. Therefore, the correct answer is "Shareholders-common shares."

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  • 23. 

    The following is the priority sequence in which liquidation proceeds will be distributed for a partnership:

    • Partnership liabilities, partnership capital balances, and partnership loans.

    • Partnership liabilities, partnership loans, and partnership capital balances.

    • Partnership drawings, partnership liabilities, partnership loans, and partnership capital balances.

    • Partnership liabilities, partnership loans, partnership drawings, and partnership capital balances.

    Correct Answer
    A. Partnership liabilities, partnership loans, and partnership capital balances.
    Explanation
    The correct answer is "partnership liabilities, partnership loans, and partnership capital balances." This means that when a partnership is liquidated, the first priority is to pay off any outstanding liabilities, followed by any loans taken by the partnership. Finally, the remaining funds will be distributed among the partners based on their capital balances. This sequence ensures that the partnership's obligations are fulfilled before any distribution of capital to the partners.

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  • 24. 

    If a partner is insolvent, his personal properties shall first be distributed:

    • To the partners by way of additional contributions when the assets of the partnership were insufficient to settle all obligations

    • To partnership and separate creditors in the ratio of their loan exposures

    • To separate creditors

    • To partnership creditors

    Correct Answer
    A. To separate creditors
    Explanation
    When a partner is insolvent, his personal properties are distributed to separate creditors. This means that the partner's personal assets will be used to settle any outstanding debts owed to creditors who are not associated with the partnership. This distribution is prioritized over any obligations owed to the partnership or partnership creditors.

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  • 25. 

    In partnership, a new partner can only be admitted if he is a

    • General partner

    • Limited partner

    • Industrial partner

    • All of the above

    Correct Answer
    A. General partner
    Explanation
    In partnership, a new partner can only be admitted if he is a general partner. This means that the new partner must have unlimited liability and be actively involved in the management and decision-making of the partnership. Limited partners, on the other hand, have limited liability and are not involved in the day-to-day operations of the partnership. Industrial partners refer to partners who contribute their expertise or resources to the partnership but may not have liability or management responsibilities. Therefore, the correct answer is general partner, as the other options do not fulfill the criteria for admitting a new partner.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 16, 2014
    Quiz Created by
    Rachel Grace
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