Partnership Act Quiz
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Are you working in a partnership or going to be a part of it? You should be aware of the Partnership Act. With this Partnership Act quiz, you can test your knowledge and see how well you understand the act and its conditions. With this quiz, you can practice as well as learn new things about the act. Try it and see how much you score. All the best! If you find it a good and informative quiz, do share it with others.
Questions and Answers
- 1.
The liability of the partners in a firm is
- A.
Limited
- B.
Unlimited
- C.
Joint and several
- D.
Both (b) and (c).
Correct Answer
D. Both (b) and (c).Explanation
The liability of the partners in a firm can be both unlimited and joint and several. Unlimited liability means that the partners are personally responsible for all debts and obligations of the firm, even if it exceeds their personal investment. Joint and several liability means that each partner is individually and collectively responsible for the firm's debts, and creditors can choose to pursue any or all partners for the full amount owed. Therefore, the correct answer is both (b) and (c) as the partners in a firm can have unlimited liability and joint and several liability.Rate this question:
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- 2.
The liability of a partner is only for the 'acts of the firm' which are done while he is a partner.
- A.
True, Section 25 of the Indian Partnership Act makes specific provisions in this regard.
- B.
False, as there is no term like 'act of the firm' in the Indian Partnership Act
Correct Answer
A. True, Section 25 of the Indian Partnership Act makes specific provisions in this regard.Explanation
The given answer is true because Section 25 of the Indian Partnership Act explicitly states that the liability of a partner is limited to the acts of the firm that are done while he is a partner. This means that a partner is not personally liable for any acts or debts of the firm that occur before or after his partnership. The provision ensures that partners are only responsible for the actions and obligations of the firm during their tenure as partners.Rate this question:
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- 3.
An act or omission by all the partners or by any partner or by the firm's agent which gives rise to a right enforceable by or against the firm is known as an
- A.
Act of partners
- B.
Act of firm
- C.
Authorized act
- D.
Actual act
Correct Answer
B. Act of firmExplanation
An act or omission by all the partners or by any partner or by the firm's agent which gives rise to a right enforceable by or against the firm is known as an act of firm. This means that any action or inaction taken by any partner or the firm's agent that leads to a legal right that can be enforced by or against the entire firm is considered an act of the firm as a whole.Rate this question:
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- 4.
An act of a partner done by him in the usual course of business is an act of the firm.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
This statement is true because in a partnership, each partner has the authority to act on behalf of the firm in the ordinary course of business. This means that any actions taken by a partner within the scope of the partnership's usual business activities are considered acts of the firm. Therefore, the firm is legally bound by these actions and can be held responsible for any consequences that may arise from them.Rate this question:
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- 5.
The firm is bound by the act of a partner, which is done by the firm within the scope of his
- A.
Express authority
- B.
Implied authority
- C.
Both (a) and (b)
- D.
Only (a).
Correct Answer
C. Both (a) and (b)Explanation
Both (a) and (b) are correct because a firm can be bound by the acts of a partner within the scope of their express authority, meaning the actions they are explicitly authorized to take on behalf of the firm. Additionally, a firm can also be bound by the acts of a partner within the scope of their implied authority, which refers to actions that are reasonably necessary to carry out the partner's express authority. Therefore, both express and implied authority can hold the firm accountable for the actions of a partner.Rate this question:
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- 6.
A firm is bound by the acts of a partner if these are done without any express authorization.
- A.
True, if such acts are within the scope of implied authority.
- B.
False, as acts without express authority are void.
Correct Answer
A. True, if such acts are within the scope of implied authority.Explanation
This statement is true because in a partnership, partners have implied authority to act on behalf of the firm in matters that are within the scope of the partnership's business. This means that even if a partner does not have express authorization to carry out a certain act, the firm can still be bound by it if it falls within the implied authority of the partner. However, if the act is outside the scope of the partnership's business or the partner's implied authority, it would not bind the firm.Rate this question:
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- 7.
A firm is bound by an act of a partner only if is done by him in
- A.
His own name
- B.
Firm's name
- C.
Managing partner's name
- D.
None of these.
Correct Answer
B. Firm's nameExplanation
In a partnership, a firm is bound by an act of a partner only if it is done in the firm's name. This means that the partner must be acting on behalf of the partnership and not in their own individual capacity. By acting in the firm's name, the partner is representing the partnership and its interests, and therefore any actions or obligations resulting from their actions will be binding on the firm. Acting in their own name or the managing partner's name would not have the same effect, as it would not be clear that they are acting on behalf of the partnership.Rate this question:
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- 8.
The scope and concept of the partner's implied authority are contained in which of the following section of the Indian Partnership Act?
- A.
Section 18
- B.
Section 19
- C.
Section 20
- D.
Section 22
Correct Answer
B. Section 19Explanation
Section 19 of the Indian Partnership Act contains the scope and concept of the partner's implied authority. This section outlines that every partner is an agent of the firm and his actions bind the firm, as long as they are carried out in the ordinary course of business. It specifies the authority of a partner to act on behalf of the firm and make decisions that are necessary for the conduct of the partnership's business. Therefore, Section 19 is the correct section that deals with the partner's implied authority in the Indian Partnership Act.Rate this question:
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- 9.
An act of a partner to borrow money is within the scope of his implied authority in case of
- A.
Trading business
- B.
Non-trading business
- C.
Both of these
- D.
None of these
Correct Answer
A. Trading businessExplanation
In a trading business, partners are typically authorized to borrow money on behalf of the partnership as it is essential for the day-to-day operations and financial needs of the business. This authority is implied as it is necessary for the smooth functioning of the business. However, in a non-trading business, where borrowing money may not be a regular activity, partners may not have the implied authority to borrow money. Therefore, the act of a partner borrowing money is within the scope of his implied authority in case of a trading business.Rate this question:
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- 10.
Which of the following acts is within the implied authority of a partner?
- A.
To engage a lawyer and defend the action brought against the firm.
- B.
To purchase goods of the kind used in the firm's business.
- C.
To engage servants to perform the business of the firm.
- D.
All of these.
Correct Answer
D. All of these.Explanation
All of these acts are within the implied authority of a partner. Implied authority refers to the authority that partners have to carry out actions that are reasonably necessary for the normal conduct of the partnership's business. Engaging a lawyer to defend the firm, purchasing goods for the business, and hiring servants to perform the business activities are all actions that fall within the scope of implied authority. Therefore, all of these acts are within the implied authority of a partner.Rate this question:
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- 11.
Which of the following acts are not included in the implied authority of a partner?
- A.
To enter into partnership on behalf of the firm.
- B.
To borrow money for the purposes of business.
- C.
To settle accounts with the persons dealing with the firm.
- D.
To buy or sell goods on account of the partnership.
Correct Answer
A. To enter into partnership on behalf of the firm.Explanation
The implied authority of a partner includes acts that are necessary for carrying out the normal business operations of the partnership. This includes borrowing money, settling accounts, and buying or selling goods on behalf of the partnership. However, entering into a partnership on behalf of the firm is not included in the implied authority of a partner. This act would require the explicit consent or authorization of all the existing partners.Rate this question:
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- 12.
Which of the following acts has not been statutorily excluded from the scope of implied authority of a partner?
- A.
To withdraw a suit or proceeding filed on behalf of the firm.
- B.
To submit a dispute relating to the business of the firm to arbitration.
- C.
To receive payment of the debts due to the firm and give receipt for the same.
- D.
To acquire or transfer immovable property on behalf of the firm.
Correct Answer
C. To receive payment of the debts due to the firm and give receipt for the same.Explanation
The acts that have been statutorily excluded from the scope of implied authority of a partner are listed in the Indian Partnership Act. These acts include withdrawing a suit or proceeding filed on behalf of the firm, submitting a dispute to arbitration, and acquiring or transferring immovable property on behalf of the firm. However, receiving payment of debts due to the firm and giving a receipt for the same is not specifically excluded. Therefore, this act is not statutorily excluded from the scope of implied authority of a partner.Rate this question:
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- 13.
A partner has implied authority to open a bank account, on behalf of the firm, in his own name.
- A.
True, as it is necessary for conducting the business affairs of the firm.
- B.
False as it has been excluded from the scope of implied authority under Section 19(2).
Correct Answer
B. False as it has been excluded from the scope of implied authority under Section 19(2).Explanation
The answer is false because opening a bank account in the partner's own name is not within the scope of implied authority under Section 19(2). Implied authority refers to the authority that a partner has to carry out actions that are necessary for conducting the business affairs of the firm. However, opening a bank account in the partner's own name does not fall under this category as it does not directly contribute to the firm's business affairs.Rate this question:
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- 14.
A partner has implied authority to
- A.
Compromise any claim by the firm
- B.
Relinquish any claim by the firm
- C.
Admit any liability in a suit against the firm
- D.
None of these.
Correct Answer
D. None of these.Explanation
A partner does not have implied authority to compromise or relinquish any claim by the firm or admit any liability in a suit against the firm. Implied authority refers to the authority that a partner has to carry out actions that are necessary or usual in the ordinary course of the firm's business. However, compromising or relinquishing claims or admitting liability in a suit are significant decisions that may have legal implications and therefore require express authority or agreement from all partners. Therefore, the correct answer is "None of these."Rate this question:
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- 15.
The implied authority of the partners may ' be restricted by an agreement between them.
- A.
True, Section 20 makes a specific provision in this regard.
- B.
False, as the implied authority of a partner, cannot be restricted by such agreements.
Correct Answer
A. True, Section 20 makes a specific provision in this regard.Explanation
The correct answer is True. Section 20 of the relevant law makes a specific provision that the implied authority of the partners may be restricted by an agreement between them. This means that partners can agree to limit or restrict each other's authority within the partnership.Rate this question:
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- 16.
If a person dealing with the firm has no knowledge of the express restrictions on the partner's implied authority. Then for such restricted acts, the firm.
- A.
Shall be liable
- B.
Shall not be liable
- C.
Is non-existent
- D.
Is a legal person.
Correct Answer
A. Shall be liableExplanation
If a person dealing with the firm is unaware of the express restrictions on the partner's implied authority, the firm will still be held liable for any restricted acts. This means that even though the person may not have known about the restrictions, the firm is still responsible for the actions of its partners. Therefore, the correct answer is "Shall be liable."Rate this question:
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- 17.
The firm is bound by an act of a partner done without any express or implied authority if such act is
- A.
Done in emergency
- B.
Done to protect the firm from loss- threatened by the emergency
- C.
Reasonable in the circumstances
- D.
All of these.
Correct Answer
D. All of these.Explanation
The firm is bound by an act of a partner done without any express or implied authority if such act is done in an emergency, done to protect the firm from loss threatened by the emergency, and is reasonable in the circumstances. This means that if a partner takes action without prior authorization in a situation of urgency, with the intention of safeguarding the firm from potential harm caused by the emergency, and if such action is considered reasonable given the circumstances, then the firm is legally obligated to abide by that partner's decision.Rate this question:
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- 18.
The firm is liable to third parties for the wrongful act of a partner if the wrongful act is done.
- A.
In the ordinary course of business of the firm
- B.
With the authority of all other partners
- C.
Either (a) or (b).
- D.
Both (a) and (b).
Correct Answer
C. Either (a) or (b).Explanation
The firm is liable to third parties for the wrongful act of a partner if the wrongful act is done either in the ordinary course of business of the firm or with the authority of all other partners. This means that if a partner commits a wrongful act while conducting the firm's regular business activities, or if the partner has obtained the consent and approval of all other partners for the act, then the firm can be held responsible for the partner's actions. Therefore, the firm's liability to third parties for a partner's wrongful act can arise from either scenario mentioned in options (a) and (b).Rate this question:
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- 19.
The liability of the firm for wrongful acts of a partner is provided in ___________.
- A.
Section 26
- B.
Section 27
- C.
Section 28
- D.
None of these
Correct Answer
A. Section 26Explanation
Section 26 provides the liability of the firm for wrongful acts of a partner. This means that if a partner commits a wrongful act while conducting business on behalf of the firm, the firm can be held liable for the partner's actions. This section helps determine the extent of the firm's responsibility and ensures that it is accountable for any wrongful acts committed by its partners.Rate this question:
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- 20.
Where the money received from a third party by the firm, in the ordinary course of its business, is misapplied by one of the partners to his own use, then the
- A.
Defaulting partner alone is liable for the same.
- B.
The firm is liable for the same.
- C.
The firm is not liable for the same.
- D.
The third-party has no remedy.
Correct Answer
B. The firm is liable for the same. -
- 21.
The firm is liable to a third party for misapplication of a third party's money or property by a partner to his own use, where the money or property is received by
- A.
A partner and then misapplied by the same partner.
- B.
The firm and then misapplied by any of the partners.
- C.
Both of these.
- D.
Only(a).
Correct Answer
C. Both of these.Explanation
The correct answer is "Both of these." This means that the firm is liable to a third party for misapplication of a third party's money or property in both scenarios: when the money or property is received by a partner and then misapplied by the same partner, and when it is received by the firm and then misapplied by any of the partners. In both cases, the firm can be held responsible for the actions of its partners in misusing the third party's money or property.Rate this question:
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- 22.
The liability of the firm for misapplication of a third party's money or property by a partner to his own use is provided in_____
- A.
Sec 26
- B.
Sec 27
- C.
Sec 28
- D.
Sec 29
Correct Answer
B. Sec 27Explanation
Section 27 of the law provides the liability of the firm for misapplication of a third party's money or property by a partner to his own use. This means that if a partner uses someone else's money or property for personal gain without their consent, the firm will be held responsible for this act. This section ensures that the firm is accountable for the actions of its partners and protects the rights of third parties.Rate this question:
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- 23.
A person, even if he is not a partner in the firm, may be held liable as a partner if he knowingly permits himself to be represented as a partner.
- A.
True, as the principle of holding out applies in such a case.
- B.
False, as a person can become a partner only by agreement, not otherwise.
Correct Answer
A. True, as the principle of holding out applies in such a case.Explanation
This statement is true because of the principle of holding out. The principle of holding out states that if a person allows themselves to be represented as a partner, even if they are not officially a partner, they can be held liable as a partner. This means that if someone presents themselves as a partner of a firm, they can be held responsible for the firm's obligations and liabilities, even if they have no actual partnership agreement.Rate this question:
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- 24.
The liability of a person, by the principle of holding out, is provided in
- A.
Section 25
- B.
Section 26
- C.
Section 27
- D.
Section 28
Correct Answer
D. Section 28Explanation
Section 28 provides for the liability of a person by the principle of holding out. This means that if a person represents themselves as a partner or agent of a firm, and others rely on this representation and transact with the firm, that person will be held liable for any obligations or debts incurred by the firm during that period. This section ensures that individuals cannot escape liability by falsely representing their association with a firm.Rate this question:
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- 25.
After retirement from the firm, which of the following person is not liable by holding out, even if the public notice of retirement is not given?
- A.
Active partner
- B.
Sleeping partner
- C.
Representative of the deceased partner
- D.
Both (b) and (c)
Correct Answer
D. Both (b) and (c)Explanation
After retirement from the firm, a sleeping partner is not liable by holding out because they are not actively involved in the day-to-day operations of the business. Similarly, a representative of a deceased partner is also not liable by holding out because they are not a partner themselves and do not have any legal obligation to the firm. Therefore, both (b) and (c) are not liable by holding out even if the public notice of retirement is not given.Rate this question:
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- 26.
An insolvent partner is not liable by holding out for acts of the firm done after his insolvency even if public notice of insolvent is not given,
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
An insolvent partner refers to a partner who is unable to pay their debts. In this context, the statement is true because an insolvent partner is not held liable for acts of the firm done after their insolvency, even if public notice of their insolvency is not given. This means that the other partners or the firm itself cannot hold the insolvent partner responsible for any actions or obligations of the firm that occur after the partner becomes insolvent.Rate this question:
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- 27.
Which of the following section of the Indian Partnership Act deals with the admission of a new partner into an existing firm?
- A.
Section 30
- B.
Section 31
- C.
Section 32
- D.
Section 33
Correct Answer
B. Section 31Explanation
Section 31 of the Indian Partnership Act deals with the admission of a new partner into an existing firm. This section specifies the conditions and procedures for admitting a new partner, including the consent of all existing partners, the need for a written agreement, and the rights and liabilities of the new partner upon admission. It also outlines the consequences of the admission, such as the new partner's share in the profits and losses of the firm.Rate this question:
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- 28.
A new partner can be admitted to the firm with the consent of
- A.
All the partners
- B.
A simple majority of partners
- C.
Special majority of partners
- D.
New partner only.
Correct Answer
A. All the partnersExplanation
In order for a new partner to be admitted to the firm, the consent of all the existing partners is required. This means that every partner in the firm must agree to admit the new partner. This ensures that the decision to admit a new partner is made collectively and unanimously by all the partners, indicating a high level of agreement and commitment to the decision.Rate this question:
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- 29.
A partner admitted in an existing firm, as per the provisions of Section 31, is known as
- A.
New partner
- B.
Incoming partner
- C.
Normal partner
- D.
Limited partner.
Correct Answer
B. Incoming partnerExplanation
An incoming partner is a partner who is admitted into an existing firm. This is in accordance with the provisions of Section 31. The term "incoming" implies that the partner is joining the firm after it has already been established. Therefore, the correct answer is "Incoming partner".Rate this question:
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- 30.
An incoming partner, who has been validly admitted to the firm, is
- A.
Liable for the past debts of the firm.
- B.
Not liable for the past debts of the firm.
- C.
Liable for debts of the firm incurred after his admission.
- D.
Both (b) and (c).
Correct Answer
D. Both (b) and (c).Explanation
When a partner is admitted to a firm, they become responsible for the debts incurred by the firm after their admission. However, they are not liable for any past debts that were incurred before their admission. Therefore, the correct answer is both (b) and (c).Rate this question:
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- 31.
The liability of an incoming partner starts from the date of his admission into the firm.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When a new partner is admitted into a firm, they become liable for the firm's debts and obligations from the date of their admission. This means that they are responsible for any liabilities that arise after they join the firm. Therefore, the statement "The liability of an incoming partner starts from the date of his admission into the firm" is true.Rate this question:
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- 32.
Which of the following section of the Indian Partnership Act, 1932 deals with the retirement of a partner?
- A.
Sec 31
- B.
Sec 32
- C.
Sec 33
- D.
Sec 34
Correct Answer
B. Sec 32Explanation
Section 32 of the Indian Partnership Act, 1932 deals with the retirement of a partner. This section outlines the procedure for a partner to retire from a partnership. It specifies that a partner can retire with the consent of all the other partners or in accordance with the partnership agreement. It also states that a retiring partner is no longer liable for any partnership debts or obligations incurred after their retirement, unless otherwise agreed upon by the partners. This section provides clarity and legal framework for the process of retirement of a partner in a partnership.Rate this question:
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- 33.
A partner may retire from an existing firm.
- A.
With the consent of till partners
- B.
As per the express agreement
- C.
By a written notice in partnership at will
- D.
All of the above.
Correct Answer
D. All of the above.Explanation
The given answer "All of the above" is correct because a partner may retire from an existing firm with the consent of all partners, as per the express agreement between the partners, or by providing a written notice in a partnership at will. These are all valid ways for a partner to retire from a partnership.Rate this question:
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- 34.
A partner who retires from an existing firm, is known as ___________
- A.
Retiring partner
- B.
Outgoing partner
- C.
Unwanted partner
- D.
Both (a) and (b).
Correct Answer
D. Both (a) and (b).Explanation
A partner who retires from an existing firm can be referred to as a retiring partner or an outgoing partner. Both terms are commonly used to describe a partner who chooses to leave the firm.Rate this question:
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- 35.
An agreement between the partners that permits a partner to retire by giving one month's notice is
- A.
Valid
- B.
Invalid
- C.
Unlawful
- D.
Unreasonable.
Correct Answer
A. ValidExplanation
An agreement between partners that allows a partner to retire by providing one month's notice is considered valid. This means that the partners have agreed to this provision and it is legally enforceable. The agreement respects the rights and choices of the partners involved, allowing them to retire from the partnership with a reasonable notice period.Rate this question:
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- 36.
A retiring partner continues to be liable to third parties for the acts of the firm.
- A.
Done before his retirement
- B.
Started earlier but was unfinished till retirement.
- C.
Both (a) and (b).
- D.
None of these
Correct Answer
C. Both (a) and (b).Explanation
A retiring partner continues to be liable to third parties for the acts of the firm both before his retirement (option a) and for any unfinished acts that started earlier but were not completed until retirement (option b). This means that even after retiring, the partner can still be held responsible for any legal or financial obligations that arose during their time in the firm.Rate this question:
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- 37.
A retiring partner continues to be liable to third parties for the acts of the firm done after his retirement until
- A.
Public notice of his retirement is given.
- B.
He deposits some security amount with the firm.
- C.
He undertakes to indemnify the firm for any loss due to his fraud.
- D.
The firm likes to make him liable.
Correct Answer
A. Public notice of his retirement is given.Explanation
When a partner retires from a firm, their liability to third parties for acts of the firm done after retirement continues until public notice of their retirement is given. This means that the retiring partner is still responsible for any obligations or liabilities that arise from the firm's actions until the public is officially informed of their retirement. This ensures that third parties are aware of the change in partnership and can adjust their expectations and dealings accordingly. The other options mentioned, such as depositing security or indemnifying the firm, do not have any bearing on the retiring partner's liability to third parties.Rate this question:
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- 38.
Where a partner retires, and the remaining partners carry on the business with the firm's property without settling the accounts with the retiring partners, the retiring partner is entitled to interest on the amount due to him at the rate of
- A.
4% p.a
- B.
6% p.a
- C.
10% p.a
- D.
None of these.
Correct Answer
B. 6% p.aExplanation
When a partner retires and the remaining partners continue the business without settling the accounts with the retiring partner, the retiring partner is entitled to interest on the amount due to him. The rate of interest is typically determined by the partnership agreement or by the prevailing market rate. In this case, the correct answer is 6% p.a, indicating that the retiring partner is entitled to interest at a rate of 6% per annum on the amount owed to him.Rate this question:
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- 39.
A retiring partner has the right to carry on a business competing with that of the firm, but he cannot.
- A.
Use the firm's name
- B.
Represent himself to be a partner
- C.
Solicit the firm's existing customers
- D.
All of these.
Correct Answer
D. All of these.Explanation
A retiring partner has the right to carry on a business competing with that of the firm, but he cannot use the firm's name, represent himself to be a partner, or solicit the firm's existing customers. This means that the retiring partner is allowed to start a competing business, but he must do so without using any association with the firm, without misleading others into thinking he is still a partner, and without trying to attract the firm's existing customers to his new business. All of these actions are prohibited for the retiring partner.Rate this question:
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- 40.
Which of the following section of the Partnership Act 1932 deals with the expulsion of a partner?
- A.
Section 31
- B.
Section 32
- C.
Section 33
- D.
Section 34
Correct Answer
C. Section 33Explanation
Section 33 of the Partnership Act 1932 deals with the expulsion of a partner. This section outlines the conditions under which a partner can be expelled from a partnership, such as if the partner becomes insolvent or is found to be mentally unsound. It also provides the procedure for expulsion, including the requirement for a majority of the partners to agree on the decision.Rate this question:
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- 41.
A partner may be expelled from the firm if the expulsion power is exercised.
- A.
As given by the express contract
- B.
By the majority of partners
- C.
In absolute good faith
- D.
All of the above
Correct Answer
B. By the majority of partnersExplanation
According to the given information, a partner may be expelled from the firm if the majority of partners exercise their expulsion power. This means that the decision to expel a partner is made by the majority of partners, as stated in the express contract. It is important to note that this decision should be made in absolute good faith, ensuring fairness and honesty in the process. Therefore, the correct answer is "By the majority of partners."Rate this question:
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- 42.
In case of improper and wrongful expulsion, the expelled partner
- A.
Does not cease to be a partner.
- B.
He is entitled to be reinstated in his position.
- C.
Can recover damages for wrongful expulsion.
- D.
Both (a) and (b).
Correct Answer
D. Both (a) and (b).Explanation
In case of improper and wrongful expulsion, the expelled partner does not cease to be a partner. This means that despite being expelled, the partner still retains their status as a partner in the business. Additionally, the partner is entitled to be reinstated in their position, meaning they have the right to be reinstated to their previous role and responsibilities within the partnership. Therefore, the correct answer is both (a) and (b), as the expelled partner does not cease to be a partner and is entitled to be reinstated in their position.Rate this question:
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- 43.
Which of the following section of the Indian Partnership Act, 1932 deals with the insolvency of a partner?
- A.
Section 31
- B.
Section 32
- C.
Section 33
- D.
Section 34
Correct Answer
D. Section 34Explanation
Section 34 of the Indian Partnership Act, 1932 deals with the insolvency of a partner. This section outlines the consequences and procedures that are to be followed when a partner becomes insolvent, including the dissolution of the partnership and the settlement of the partner's accounts. It provides guidance on how the remaining partners should handle the insolvent partner's share of the partnership assets and liabilities.Rate this question:
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- 44.
On the insolvency of a partner, the insolvent ceases to be a partner in the firm whether the firm is dissolved or not.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When a partner becomes insolvent, it means that they are unable to pay their debts. In such a situation, the insolvent partner is no longer able to fulfill their obligations as a partner in the firm. Therefore, regardless of whether the firm is dissolved or not, the insolvent partner ceases to be a partner in the firm. This is because their financial situation prevents them from actively participating in the partnership and fulfilling their responsibilities. Hence, the statement is true.Rate this question:
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- 45.
Which of the following statements is correct?
- A.
The estate of an insolvent partner is not liable for the acts of the firm done after the order of insolvency.
- B.
The public notice of insolvency of a partner is not necessary.
- C.
The firm is not liable for any act of the insolvent partner done after the date of order of insolvency.
- D.
All of the above statements are correct.
Correct Answer
D. All of the above statements are correct.Explanation
The correct answer is "All of the above statements are correct." This means that all three statements mentioned in the question are true. According to this answer, the estate of an insolvent partner is not responsible for any actions taken by the firm after the order of insolvency. Additionally, a public notice of insolvency for a partner is not required, and the firm is not liable for any actions taken by an insolvent partner after the date of the order of insolvency.Rate this question:
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- 46.
On the death of a partner, public notice of death is not given, and the firm continues the business. Then for the acts of the firm done after his death, the estate of the deceased partner is
- A.
Liable
- B.
Not liable
- C.
Treated as security
- D.
Proportionately liable.
Correct Answer
B. Not liableExplanation
When a partner dies, the partnership does not need to give public notice of the death and can continue operating. In this situation, the estate of the deceased partner is not liable for any acts or obligations of the firm that occur after their death. This means that the estate is not responsible for any debts, liabilities, or legal matters arising from the firm's activities after the partner's death. The remaining partners are the ones who assume responsibility for the firm's actions and any resulting consequences.Rate this question:
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- 47.
An act of a partner done by him in_____ is binding on the firm.
- A.
His own name
- B.
Firm's name
- C.
Managing partner's name
- D.
Manager's name.
Correct Answer
B. Firm's nameExplanation
An act of a partner done in the firm's name is binding on the firm. This means that any actions taken by a partner on behalf of the firm, using the firm's name, will have legal consequences for the entire firm. The firm is responsible for the actions of its partners when they are acting within the scope of their partnership duties.Rate this question:
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- 48.
__________ is within the implied authority of a partner.
- A.
To engage a lawyer (d)
- B.
To withdraw the firm's suit.
- C.
To acquire immovable property on the firm's behalf.
- D.
To compromise any claim by the firm.
Correct Answer
A. To engage a lawyer (d)Explanation
The correct answer is (d) To engage a lawyer. Engaging a lawyer is within the implied authority of a partner because legal representation is often necessary for the smooth operation of a business. Partners have the authority to make decisions and take actions that are necessary for the functioning of the firm, and engaging a lawyer to handle legal matters falls within this scope of authority.Rate this question:
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- 49.
The liability of an incoming partner starts from the date of __________.
- A.
Formation of firm
- B.
Public notice
- C.
His admission
- D.
Registration of firm
Correct Answer
C. His admissionExplanation
The liability of an incoming partner starts from the date of his admission. This means that once a partner is officially admitted into the partnership, they become responsible for any debts or obligations of the firm from that point onwards. It is important for the partners to keep track of the admission dates to determine the extent of liability for each partner.Rate this question:
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- 50.
The liabilities and rights of __________ are the same as those of a retiring partner.
- A.
Incoming partner
- B.
Insolvent partner
- C.
Minor partner
- D.
Expelled partner
Correct Answer
D. Expelled partnerExplanation
The liabilities and rights of an expelled partner are the same as those of a retiring partner. This means that when a partner is expelled from a partnership, they are treated in the same way as a partner who voluntarily retires. They will have the same obligations and entitlements as a retiring partner, including settling any outstanding liabilities and receiving their share of the partnership assets.Rate this question:
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