1. James was invited to join the partnership of George and Nick, a used car dealership business, Speed Ten Co. James agreed to join the partnership, bringing with him a capital contribution of $2,000,000.00. At the time James joined, the partnership has assets in the total amount of $15,000,000.00, inclusive of his contribution. Immediately after joining, James inspected the partnership books and discovered to his horror that the partnership had liabilities to creditors amounting to $22,000,000.00. A few months later, the partnership was beset with law suits from creditors because it could no longer pay back its debts on time. Which of the following statements is correct? a.) James is not liable to pay for partnership debts with his own personal property.

b.) Jonathan is liable to pay for partnership debts with his own personal property, but only up to $2,000,000.00.

c.) Only George and Nick are liable to pay for the partnership debts in the amount of $7,000,000.00 with their own personal properties.

d.) The partners are all liable to pay for the partnership debts in the amount of $7,000,000.00 with their own personal properties.

2. The following are the property rights of a partner in a partnership except:

a.) The partner's right to demand reimbursement for all money advanced for the partnership, without distinction as to purpose.

b.) The partner's right to be part of managing the business of the partnership.

c.) The partner's share in the profits and surplus of the partnership.

d.) The partner's right to use and possess specific partnership property.

3. Which of the following statements is true with regard to the dissolution of a partnership?

a.) The separate juridical existence of a partnership ceases to exist immediately after dissolution.

b.) The sale of a partner's interest in the partnership causes its dissolution.

c.) The assignment of a partner's interest in the partnership causes its dissolution.

d.) The separate juridical existence of a partnership continues until winding up is completed.

4. When a partner's interest in the partnership is subjected to a charging order by a lawful order of a court, what can the partners in a general partnership legally do to have this charging order lifted without causing the dissolution of the partnership?

a.) The partner whose interest is charged under the charging order may use his share of the profits to pay the judgment creditor.

b.) The managing partner may use partnership property and profits to pay the amount charged by the charging order in favor of the judgement creditor.

c.) Partners may exclude the partner whose interest is charged from the partnership.

d.) Partners may use their own properties to pay the amount charged by the charging order in favor of the judgment creditor.

5. Lewis Leathers Co., a general partnership established on 12 June 2008, is engaged in the business if selling high quality leather goods such as bags and shoes. The partnership is composed of three general partners, Anna, Michelle and Ronna with a total capital of $15,000,000.00. Due to COVID-19 pandemic, the business began to suffer severe financial losses on 01 June 2020. During a partnership meeting on 08 December 2020, Ronna mentioned her qualms about the continued viability of the business and announced her intention to leave the partnership if the financial situation did not improve by February 2021. On 04 January 2021, Michelle was caught stealing from the partnership funds by Anna and was reported to the police. Invoking their rights under the partnership contract, Anna and Ronna voted Michelle out of the partnership on 20 January 2021. The next day, Anna contracted COVID-19 and was hospitalized due to sever complications. In the middle of February 2021, Ronna formally announced her departure from the partnership citing the unsustainable losses suffered by the business. Ronna eventually passed away on 01 March 2021 due to her COVID-19 infection. Given the foregoing facts, when did the partnership undergo dissolution?

a.) 01 June 2020

b.) 01 March 2021

c.) 08 December 2020

d.) 04 January 2021

e.) no dissolution validly occurred

f.) 15 February 2021

g.) 20 January 2021

6. Which of the following statements is true?

a.) A limited partner may give advice on matters regarding the management if the business.

b.) A limited partner may demand the extrajudicial dissolution of a partnership.

c.) A limited partner may contribute industry to the common fund.

d.) A limited partner may not engage in business that is the same as the partnership's business.

7.) Upon the dissolution of a general partnership, organize the priority of payment by the Partnership to the parties concerned.

First --->

Second --->

Third --->

Fourth --->

a.) General Partner Advances for the Partnership

b.) General Partnership Creditors

c.) General Partner Contributions for Damages

d.) General Partner Capital

e.) General Partner Profits

f.) General Partner Personal Debts

8.) Which of the following statements is false regarding dissolution of a General Partnership?

a.) A general partner claiming that he no longer has money to pay off his personal debts causes the dissolution of the partnership.

b.) Third persons may continue transacting ordinary business with a dissolved partnership, such as buying out remaining inventory of goods.

c.) The death of a general partner results in the dissolution of the partnership but his estate is not liable for partnership debts subsequently incurred after notice of such fact was advertised in the local newspaper.

d.) The partner who unilaterally leaves and terminates the partnership before the completion of its specific undertaking is still entitled to receive the value of his interest in the partnership.

9.) Match the following rights of a partner with the appropriate categorization.

Principal Property Rights --->

Related Rights --->

a.) Right to a formal account of partnership affairs.

b.) Right to participate in the management of the partnership.

c.) Right to full information on all matters affecting the partnership business.

d.) Right of a capitalist general partner to engage in a line of business different from the partnership business.

e.) Right to choose third persons who may be admitted into the partnership as partners.

f.) Rights in specific partnership property.

g.) Right to reimbursement for advances made for the partnership.

h.) Right to dissolve the partnership.

i.) Right to inspect partnership books.

j.) Right to interest in the partnership.

10. Joanna is the Managing Partner of Keishi Ltd., a duly registered partnership which owns and operates a Japanese cuisine restaurant in Paranaque City. Joanna's partners, Raymond and Kayla, are general and limited partners respectively. Because all three partners are close friends, they handed Joanna the reins of the business making her responsible for the day to day operations of the business. They also trusted Joanna to take care of the partnership since she owned 40% of the equity in the partnership. Joanna's boyfriend Andre was experiencing financial difficulties, so she promised to bring him into the partnership in order to help with his income. Joanna agreed to share half of her share of the profits with Andre and promised him that she would get Raymond and Kayla to agree with bringing him into the partnership. Unfortunately, only Raymond agreed and Kayla objected to the admission of Andre into the partnership. Which of the following statements is correct?

a.) Andre is a limited partner because of Joanna's power as managing partner to accept additional limited partners without needing to consult Raymond.

b.) Andre is a subpartner with a right to the share of the profits Joanna promised him.

c.) Andre is a general partner because the objecting partner, Kayla, is merely a limited partner with no say in the matter.

d.) Andre is not a partner and has no rights to any profits.

11. Tina's Shakes and Bakes is run by Maya and Sabrina who are both celebrity chefs specialized in baking cakes and pastries. When they partnered up to create the business, they did so with the common understanding that they would equally contribute funding and exclusively devote their culinary talents to the business. After raising capital of $10,000,000.00, Maya and Sabrina started operation in Antipolo City. Maya and Sabrina started a social media campaign wherein they hired endorsers and influencers to pass on the word about their delicious cupcakes and cookie dough mixes. One influencer, Janine, loved their food and asked if she could become a partner. She offered $5,000,000.00 to Sabrina as proof that she was very much willing to contribute to the partnership. Sabrina instead told Janine that she was willing to sell her interest in the partnership for such price, to which Janine immediately agreed. Which of the following statements is correct?

a.) Tina's Shakes and Bakes was dissolved after Sabrina sold her interest to Janine without consulting Maya.

b.) Janine is entitled to receive a share of the profits of the partnership but she is not a partner.

c.) Sabrina is still a partner but is legally obliged to bring to the common fund the amount paid to her by Janine.

d.) Janine is not entitled to receive a share of the profits of the partnership but may demand a refund and damages from Sabrina.

12. Easy Q-Mart is an online grocery delivery business of Ramon & Co. Ltd. a partnership with principal business address at 15 Santo St., Quezon City. Brian is the managing industrial partner who monitors the operations of the business while Kristen is a limited partner who invested $2,000,000.00 into the business. The partnership has a mobile delivery app wherein customers can shop their groceries and have these delivered to their chosen address within Metro Manila by the delivery personnel of the partnership. They also have physical grocery stores scattered across Metro Manila where customers can directly buy groceries, Due to the COVID-19 pandemic, sales in the physical grocery stores plummeted while the demand for online deliveries skyrocketed. To prevent further losses and capitalize on the booming e-commerce industry, Brian decided to close down all physical grocery stores and cancelled their leases. Brian then consolidated all operations in their warehouse in Santo St. and purchased additional vehicles to meet the increased demand for deliveries. When Kristen found out about this, she protested and asked why she was not consulted first. Which of the following statements is correct?

a.) Brian did not have the sole authority to close down the physical stores and cancel their leases because this changed the partnership's line of business.

b.) Kristen has no right to protest because she is a limited partner, she has no right to control the running of the partnership business.

c.) Kristen may only protest Brian's actions if she was not being given her share of the profits as a limited partner.

d.) As managing partner, Brian had the sole authority to close down the physical stores and cancel their leases.

13. Upon the dissolution of a limited partnership, organize the correct priority of payment by the Partnership to the parties concerned.

First --->

Second --->

Third --->

Fourth --->

Fifth --->

Sixth --->

a.) Limited Partnership Creditors

b.) General Partner Personal Debts

c.) General Partner Advances for the Partnership

d.) General Partner Capital

e.) Limited Partner Profits

f.) Limited Partner Personal Debts

g.) Limited Partner Capital

h.) General Partner Profits

14. Cheska and Ariana are general partners in the duly registered partnership, "Cheska's Events and Planning" which is engaged in the business of events planning and catering. Their total capital contribution to the partnership fund is $5,000,000.00, each of them owning an equal stake in the partnership. To raise additional funds for their business, they invited Amelia to invest in their business as a limited partner for the investment amount of $5,000,000.00. Excited at the prospect, Amelia asked that her name be included in the business signage and immediately paid over the money to the partnership's bank account. Amelia also promised not to interfere in the management of the business and that she would let Cheska and Ariana run things as they normally would. Seeing Amelia's deposit Cheska and Ariana agreed to Amelia's request and subsequently changed the name of the partnership to "Caroline and Amelia's Events and Planning Ltd." Which of the following statements is correct?

a.) The partnership remains to be a general partnership with Amelia subject to the liabilities of a general partner/

b.) A limited partnership was validly formed with Amelia as a limited partner.

c.) A limited partnership was validly formed with Amelia simultaneously a general partner and limited partner.

d.) No partnership was validly created between Cheska, Ariana and Amelia.