58) Which of the following partners of a limited partnership invest capital but do not participate
in management?
A) specific partners
B) limited partners
C) general partners
D) sole proprietors
59) Which of the following is true of general and limited partners in a limited partnership?
A) Limited partners are exempt from annual capital investment and need only participate in
management functions.
B) General partners are not personally liable for partnership debts.
C) General partners are required to invest capital and refrain from managerial activities.
D) Limited partners are not personally liable for partnership debts beyond their capital
contributions.
60) Justin and Michael form a limited partnership and start a car dealership. Justin is the general
partner and Michael is the limited partner. Seven months after the commencement of the
business, Pedro makes an investment and wishes to become a general partner. A week later,
Michael’s mother wishes to join the partnership as a limited partner. Which of the following is
true in this scenario?
A) Pedro cannot become a general partner to the partnership after the business has commenced.
B) Pedro cannot become a general partner to the partnership as a limited partnership can only
have one general partner.
C) Michael’s mother cannot become a limited partner to the partnership as a limited partnership
can only have one limited partner.
D) Both Pedro and Michael’s mother can choose to become either general or limited partners to
the partnership.
61) Which of the following is true of a limited partnership?
A) Other limited partnerships cannot become limited partners in an existing limited partnership.
B) A limited partner is personally liable for the debts of the partnership.
C) Corporations are allowed to become partners in a limited partnership.
D) A limited partnership can have only one general partner but multiple limited partners.
62) Which of the following information should a certificate of limited partnership contain?
A) the latest date of dissolution of the partnership
B) a clause to not accept new general partners
C) the name of the party who becomes a general partner in the event of transfer
D) the scope of potential business opportunities and related investment
63) Which of the following governs a limited partnership, its internal affairs, and the liability of
its limited partners?
A) the federal government
B) all states in which the business operates
C) the articles of limited partnership
D) the law of the state in which it is organized
64) ________ is said to have occurred if a certificate of limited partnership was not properly
filed.
A) Defective formation
B) Illegitimate partnership
C) Void partnership
D) Voidable association
65) Partners who erroneously but in good faith believe they have become limited partners can
escape liability as general partners by ________.
A) adding their surname to the name of the business establishment
B) filing for a refund of his or her initial investment with interest
C) bringing a lawsuit against all general and limited partners
D) withdrawing from any future equity participation in the enterprise
66) Which of the following is true of a limited partnership agreement?
A) It provides that all transactions must be approved by all partners.
B) It does not contain information about dissolution of the partnership as it an agreement of
formation.
C) It provides that general and limited partners have equal voting rights.
D) It sets forth the terms and conditions regarding the termination of the partnership.
67) Which of the following types of liability do general partners of a limited partnership have for
the debts and obligations of the limited partnership?
A) unlimited personal liability
B) limited capital liability
C) liability of termination as partner
D) limited personal liability
68) Which of the following types of liability do limited partners of a limited partnership have for
the debts and obligations of the limited partnerships?
A) unlimited personal liability
B) liability restricted to debts up to their capital contributions
C) liability of termination as partner
D) unlimited organizational capital liability
69) According to the RULPA, what liability does a corporation have if it is a general partner to a
limited partnership?
A) unlimited personal liability
B) liability restricted to debts up to its capital contributions
C) liability of termination as partner
D) unlimited organizational capital liability
70) Under partnership law, ________ have the right to manage the affairs of the limited
partnership.
A) investors
B) sole proprietors
C) limited partners
D) general partners
71) Laura is an investor limited partner in a limited partnership. Two years after she becomes a
limited partner, Laura thinks that the general partners are not doing a very good job managing
the affairs of the limited partnership and participates in the management of the limited
partnership. While she is doing so, a bank loans $1 million to the limited partnership, believing
that Laura is a general partner. If the limited partnership defaults on the $1 million loan, which of
the following holds well?
A) Laura is not personally liable as she is a limited partner on paper.
B) Laura is personally liable as the bank, in good faith, thought she is a general partner.
C) Laura has unlimited personal liability as a limited partner.
D) Laura’s liability is restricted to the value of her capital investment in the partnership.
72) Which of the following is a cause for the dissolution of a partnership?
A) written consent of the general partners
B) withdrawal of a general partner
C) withdrawal of all limited partners
D) acquisition of business by another partnership
73) If a corporation is a general partner to a limited partnership, which of the following would
result from the dissolution of the corporation?
A) dissolution of the limited partnership
B) creation of a general partnership
C) reformation of the limited partnership
D) transfer of the partnership to other parties
74) Which of the following happens when a general partner withdraws from a limited
partnership?
A) The partnership must be sold.
B) The partnership is transferred.
C) The partnership is dissolved.
D) The partnership operates normally.
75) If Gerard Koontz retires from being a general partner in a limited partnership, which of the
following is true?
A) A member from Mr. Koontz’s immediate family is allowed to take his partnership interest.
B) Only the person Mr. Koontz nominates can take his partnership interest.
C) The partnership is dissolved, according to RULPA norms.
D) The partnership operates normally, without a general partner.
76) Who among the following get first priority in the distribution of assets upon the dissolution
of a partnership?
A) investors
B) limited partners
C) general partners
D) creditors
77) List the advantages and disadvantages of a sole proprietorship.
78) Explain in brief the formation of a general partnership.
79) How are assets distributed after the dissolution of a general partnership?
80) Explain in brief the liabilities of general and limited partners in a limited partnership.
81) Explain the events that cause the dissolution of a limited partnership under RULPA.
82) The designation of ________ is used for businesses that are operating under a trade name.
83) A(n) ________ is a document that is filed with the state that designates a trade name of a
business.
84) The sole proprietor has ________ liability.
85) An ordinary partnership is also known as a(n) ________.
86) The ________ Act is a model act that codifies general partnership law.
87) General partners have ________ liability for the debts and obligations of the partnership.
88) While claiming under ________ liability, a plaintiff must name the partnership and all of the
partners as defendants in a lawsuit.
89) A(n) ________ is a partnership created for a fixed duration.
90) A(n) ________ is a partnership created with no fixed duration.
91) ________ is a rule which provides that upon the death of a general partner, the deceased
partner’s right in specific partnership property vests in the remaining partner or partners; it does
not pass to his or her heirs or next of kin.
92) The ________ Act is a uniform act that regulates the formation, operation, and termination
of limited partnerships.
93) Limited partnerships are also known as ________.
94) A(n) ________ is a document that two or more persons must execute and sign that makes a
limited partnership legal and binding.
95) ________ occurs when (1) a certificate of limited partnership is not properly filed, (2) there
are errors in a certificate that is filed, or (3) some other statutory requirement for the creation of a
limited partnership is not met.
96) A(n) ________ is a document that sets forth the rights and duties of general and limited
partners.
97) A(n) ________ is a document that is filed with the secretary of state upon the dissolution of a
limited partnership.