Multiple-choice tests 1:

1.Teresa, Olga, Pamela and Sonia, partners in TOPS Company Limited, a trading company, have contributions of P50,000.00 each. Teresa and Olga are general partners; Pamela, a limited partner; and Sonia, a general-limited partner. TOPS Company Limited purchased merchandise on credit from Moret Sales Co amounting to P180,000.00. On due date, however, TOPS CompanyLimitedwas unable to pay . Accordingly, Moret Sales Co. filed a cause of collection against the partnership which by then had assets amounting P150,000.000. from whom may Moret Sales Co. collect the sum of P180,000.00?

a.The partnership for its assets of P150,000.00, thereafter, from Teresa and Olga at P15,000.00 each from their separate assets.

b.Teresa and Olga only at P90,000.00 each from their separate assets.

c.The partnership for its assets of P150,000.00 thereafter, from Teresa, Olga, and Sonia at P10,000.00 each from their separate property. However, Sonia can recover P5,000.00 each from Teresa and Olga.

d.Teresa, Olga and Sonia at P60,000.00 each. Thereafter, Sonia can recover from Teresa and Olga P30,000 each.

2.Gregory, Edmond and Mark are partners in GEM Company with contributions of P10,000, P40,000 and P50,000 respectively. Their agreement shows that they will share in the profits in the ratio of 2:3:4. During the year, the partnership sustained a loss of P9,000.00. How shall this loss be divided among the partners?

a.Equally at P3,000.00 each.

b.Gregory, P900.00; Edmond, P3,600; and Mark P4,500

c.Gregory, P2,000.00; Edmond P3,000.00 and Mark P4,000.00

d.The partners must establish first a loss sharing agreement before the loss may be divided because they failed to have an agreement on the division of loss.

3.Which of the following stipulation is valid?

a.A stipulation excluding a capitalist partner from profits.

b.A stipulation exempting a capitalist partner from losses.

c.A stipulation exempting an industrial partner from losses.

d.A stipulation excluding an industrial partner from profits.

4.A partner can engage in business for himself without the consent of his co-partners if he is:

a.a capitalist partner whether or not the business he will engage in is of the same kind as or different from the partnership business.

b.an industrial partner whether or notthe business he willengage in is of the same kind as or different from the partnership business.

c.a capitalist partner and the business he will engage in is of a kind differentfrom the partnership business.

d.An industrial partner and the business he will engage in is of a kind different from the partnership business.

5.The partnership will bear the risk of the loss of three of the followingthings. Which is the exception?

a.Things contributed to be sold.

b.Fungible things or those that cannotbe kept without deteriorating.

c.Things contributed so that only their use and fruits will be for the common benefit.

d.Things brought and appraised in the inventory.

6.A partner's interest in the partnership is his shareof the profits and surplus which he may assignto a third person. Which of the following statements concerningsuch right is correct?

a.The conveyance of a partner's interest will cause the dissolution of the partnership

b.The assignee becomes a partner.

c.The assignee has a right to interferein the management of the partnership business.

d.The assignee has the rightto receive the profitswhich the assigning partner would otherwise be entitled to.

7.Torres is indebted for P5,000.000 to MACE Trading Company, a partnership managed by Mendoza to whom Torres also owes P10,000.00. The two debts which are both demandable are unsecured. Torres remits P4,500 to Mendoza in payment of his debt to him. Accordingly, Mendoza issues a receipt for his own credit. To which credit should the payment be applied?

a.To Mendoza's credit becausethe payment made by Torres is intended for his debt to Mendoza who issued his own receipt.

b.To both the partnership credit and Mendoza's credit proportionately at P1,500.00 and P3,000.00 respectively.

c.To Mendoza's credit because its amountis greater than that of the partnership credit.

d.To the partnership credit because the managing partnershould not prefer his own interest to that of the partnership.

8.In three of the following wrongful acts of partners, the partnership is solidarily liable with all the partnersto third persons. Which one is the exception?

a.For loss or injury caused to a third person by reason of the wrongful act or omission of a partner acting in the ordinary course of business.

b.Where a partner acting within the scope of his apparent authorityreceives money or propertyof a third person and misappropriates it.

c.Where the partnership receives money or property of a third person in the ordinary course of business and suchmoney or propertyis misapplied by a partner while it is in the custody of the partnership.

d.For loss or injury caused to a third person by reason of the use of partnership property by a partner for personal purpose.

9.Benito, Ignacio, Gregorio, Artemio and Servando are partners in BIGAS Company which is engaged in the buying and selling of rice. Benito is the manager. Ignacio was also given a special power of attorneyby the partnership to buy a van for the company. No other power was given to all the partners. In which of the following acts or contractsis the partnership not bound by the act of the partner?

a.Ignacio buying rice for the partnership from Teodoro who has no knowledge of Ignacio's lack of authority.

b.Ignacio buying a van for the partnership from Teresa.

c.Gregorio buying a van for the partnership from Thelma who has no knowledge of Gregorio's lack of authority

d.Benito selling rice for the partnership.

10.Statement I.- The profits and losses of the partnership shall be dividedamong the partners if they have no profit and loss sharing agreement .

Statement II. - A stipulation exempting the capitalist partner from losses is valid.

a.Statement I is correct, and Statement II is incorrect.

b.Statement I is incorrect, and Statement II is correct.

c.Statements I and II are correct.

d.Statements I and II are incorrect.

11.Statement I. - A newly admitted partner is liable for partnership debtscontracted before his admission to the extent of his contribution , unless there is contrary stipulation.

Statement II. - A partner may associate anotherperson with him in his share, but the person associated shall not be admitted to the partnership without the consent of all the partners.

a.Statements I and II are correct.

b.Statements I and II are incorrect.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

12.Statement I. - The partnership shall be solidarily liable with all the partnersif one partner acting within the scope of his authority receives a money or property of a third person and misapplies it.

Statement II. - When a partner is not authorized to act for the partnership and the act of the partner is not for apparently carrying on the business of the partnership shall be bound by the act of such partnerif the third person was not unaware of the partner's lack of authority.

a.Both statements are correct.

b.Both statements are incorrect

c.Statement I is correct, and statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

13.The following statements pertain either to partner appointed as manager in the articles of partnership or through a document after the formation of the partnership.

I.He may be removed as manager only for a just or lawful cause by the vote of the partners owning the controlling interest.

II.He may be removed as manager with or without just or lawful cause by the vote of the partners owning the controlling interest.

III.He may perform all acts of administration despite the opposition of his partners provided he is in good faith.

IV.He may perform all acts of administration in good faith but opposing partners may resort to his removal if he persists.

Based on the foregoing :

a.I and IIIpertain to a partnerappointed as manager in the articles of partnership.

b.I and III pertain to a partner appointed as manager through a documentafter the formation of the partnership.

c.II and III pertain to a partnerappointed through a document after the formation of the partnership.

d.I and IV pertain to a partner appointed as manager in the articles of partnership.

14.It refers to the pro rata liability for partnership obligations of the partnersincluding industrial ones , to the extent of their separate property after partnership assets have been exhausted.

a.Subsidiary liability

b.Secondary liability

c.Primary liability

d.None of the foregoing.

15.Statement I. - Persons who, not being partners, include their names in the firm name do not acquire the rights of a partner but they shall be subject the liability of a partner in so far as third persons without notice are concerned.

Statement II. - All partners including industrial ones , shall be liable pro rata with all their propertyand after all the partnership assetshave been exhausted for the contract which may have been entered into in the name of the partnership.

a.Both statements are incorrect.

b.Both statements are correct.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

Multiple-choice tests 2:

1.It refers to the process of settling the business or partnership affairs after dissolution?

a.Dissolution

b.Liquidation

c.Termination

d.Suspension of Operations.

2.It refers the change in the relation of the partnerscaused by any partnerceasing to be associatedin the carryingon of the business.

a.Dissolution

b.Liquidation

c.Insolvency

d.Termination

3.Statement I. - On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is terminated.

Statement II. - Dissolution does not automatically resultin the termination of the legal personality of the partnership.

a.Statement I is correct, and Statement II is incorrect.

b.Statement I is incorrect, and Statement II is correct.

c.Both Statements I and II are correct.

d.Both Statements I and II are incorrect.

4.Statement I. - The partner who breaks off the partnership with an unfair design, or for selfish objects, discharges his co-partnersfrom all liabilitiesto him but he does not thereby free himself from his obligation to them .

Statement II. - The agreement to dissolve the partnership before the terminationof the specified termor particular undertakingmust be unanimous.

a.Statements I and II are correct.

b.Statements I and II are incorrect.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

5.The following instances will cause the dissolution of partnership without violating the agreement between or among the partners except:

a.By the termination of the definite termor particular undertakingspecified in the agreement;

b.By the express will of any partner, who must act in good faith when no definite term or particular undertaking is specified;

c.By the express will of all the partners.

d.By the civil interdiction of any partner.

6.Statement I. - A partner guilty of wrongful dissolution is not given the right to wind up partnership affairs.

Statement II. - Dissolution of a partnership may be caused involuntarilywhen a supervening event makes the business itself of the partnership unlawful.

a.Statements I and II are correct.

b.Statements I and II are incorrect.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect. and Statement II is correct.

7.Statement I. - of The liquidation of partnership affairs is by law entrusted to the surviving partners if the dissolution is caused by death of a partner.

Statement II. - A clause in the articles of partnership providing for the continuation of the firm notwithstanding the death of one of the partners is legal.

a.Statements I and II are incorrect.

b.Statements I and II are correct.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

8.Statement I. - The insolvency of the partner or of the partnership as cause for dissolution must be adjudged by a court.

Statement II. - In the absence of an express agreement to the expulsion of a partner, there exists no right or power of any member , or even a majority of the partners , to expel all other membersof the firm at will.

a.Statements I and II are correct.

b.Statements I and II are incorrect.

c.Statement I is correct, and Statement II is incorrect.

d.Statement I is incorrect, and Statement II is correct.

9.Which of the following will not cause the automatic dissolution of a general partnership?

a.Death of a capitalist partner.

b.Insolvency of a capitalist partner.

c.Insanity of an industrial partner.

d.Civil Interdiction of an industrial partner.

10.Querubin, Roces and Solis are partners in a law firm. Querubin was appointed as judge of the Regional Trial Court. Such appointment:

a.suspends the participation of Querubin in the management of the firm without causing the dissolution of the partnership.

b.prohibits the inclusionof the nameof Querubin in the firm name without dissolving the partnership.

c.Results in the dissolution of the partnership.

d.Merely requires the disclosure of Querubin's appointmentto the court without dissolving the partnership.

11.Statement I. - A general partnership is automatically dissolved by reason of the insanity of a partner.

Statement II. - After dissolution, a partnership is still bound by the act of a partner authorizedto act for the partnership with respect to the completion of transactions begun before dissolution.

a.Statements I is incorrect, and Statement II is correct.

b.Statements I is correct, and Statement II is incorrect.

c.Statements I and II are correct.

d.Statements I and II are incorrect.

12.On dissolution in contravention of the partnership agreement, the rights of partner who has not caused the dissolution wrongfully are the following except:

a.To have the partnership property applied to discharge the liabilities of the partnership.

b.To have the surplus, if any, applied to pay in cash the net amount owing to the respective partners.

c.To be indemnified for damages from the partner who has caused the wrongful dissolution of the partnership.

d.Not to continue the business of the partnership in the same name, either by themselves or jointly with others.

13.This involves the sale of the assets of the partnership, the payment of its liabilities , and the distribution of the remaining cash or other property to the partners.

a.Liquidation

b.Dissolution

c.Suspension

d.Insolvency

14.Fraud or misrepresentation to enter into the partnership contract could be a ground for rescission of the partnership agreement. The following are the rights of a partner who was induced by fraud or misrepresentation except:

a.Right of lien on, or retention of, the surplus of the partnership property, after the satisfaction of partnership liabilities for any sum of money paid by him to the partnership by way of capital or advances.

b.Right of subrogation in place of partnership creditorsfor any payment made by him for partnership liabilities.

c.Right of indemnification from the person guilty of fraud or misrepresentation against all debts of the partnership.

d.None as all of the choices are correct.

15.The dissolution of a partnership could be by decree of courtin the following cases except:

a.A partner has been declared insane in any judicial proceedingsor is shown to be of unsound mind

b.A partner in any way incapable of performing his part of the partnership contract.

c.The business of the partnership can only be carried on at a loss.

Multiple-choice tests 3:

1.In a limited partnership where there are four (4) partners:

a.All the partners must be limited partners

b.The number of limited partners must be equal to the number of general partners , that is 2:2

c.The number of limited partners must be greater than the number of general partnersthat is 3:1

d.It is enough that there is one limited partner: the rest may all be general partners.

2.A limited partner may contribute:

a.Money and/or property

b.Money and/or services

c.Property and/or services

d.Services only.

3.A limited partner shall be liable as general partner in three of the following cases. Which one is the exception?

a.When he is a general-limited partner as stated in the certificate.

b.When he takes part in the control of the business.

c.When he participates in the managementof the business.

d.When his surname which appears in the partnership name is also the surname of a general partners.

4.Which of the following omissions will make a partnership formed as limited partnership liable as a general partnership?

I.The certificate is not signed and sworn to by all the partners.

II.The certificate is not registered with the Securities and Exchange Commission.

III.The partnership name does not include the word "Limited or Ltd., its abbreviation, in the certificate.

a.I and II

b.II and III

c.I and III

d.I, II, and III

5.A person admitted to all the rights of a limited partner who has died or has assigned his interest in the partnership is known as:

a.An ostensible partner

b.A liquidating partner

c.A substituted limited partner.

d.A general-limited partner

6.Which of the following will not cause the automatic dissolution of a limited partnership?

a.Death of a general partner

b.Death of a limited partner

c.Insolvency of a general partner

d.Insanity of a general partner.

7.Josephine, Ellen, Wilma, Edith and Lydia are partners in JEWEL Company LTD. Josephine, Ellen and Wilma are general partners, Edith is a general-limited partner, while Lydia is a limited partner. Based on the foregoing information, which of the following statements is false?

a.Josephine, Ellen and Wilma may be held liable with their separate property after the exhaustion of partnership assets.

b.Edith may participate in the management of the partnership.

c.Edith may not be held liable with her separate property for partnership debts after the exhaustion of partnership assets.

d.Lydia may not be held liable with her separate property for partnership debts after the exhaustion of partnership assets.

8.Wilma, Olga and Wynona agreed to form a limited partnership with Wilma and Olgaas general partners contributing P50,000.00 each, and Wynona as limited partner contributing P100,000.00. The partnership which is to engage in the tradingof garments was named"WOW Garments Co. Limited" as indicated in the Certificate signed and sworn toby the partnersbefore a notary public. However, the certificate was not filed with the Securities and Exchange Commission. In the meantime, the partners already begun operating the business and transacting with third persons.

a.The partnership entered into by the Wilma, Olga and Wynona is void.

b.The partnership will be considered a general partnership. Accordingly, all partners will be liable with their separate propertyafter the exhaustion of partnership assets.

c.The partnership will be considereda limited partnership as indicated in its name. Only Wilma and Olga will be liable with their separate property after the exhaustionof partnership assets.

d.Wilma, Olga and Wynona will be considered separately as sole proprietors with each one having a capital equivalent to their respective contributions.

9.The following partnership contracts were presented to you for evaluation:

I.A partnership engaged in the sale of office supplies with a capital of P100,000.00 broken down into: cash P30,000.00; office supplies for sale, P50,000.00; and office equipment, P20,000.00. The agreement is in a private instrument.

II.A partnership engaged in the lease of offices spaces with a capital of P700,000.00 broken down into: land, P100,000.00; building, P500,000.00; cash P80,000.00; and office equipment , P20,000.00. The agreement is not recorded with the Securities and Exchange Commission.

III.A partnership engaged in the trading of computers whose name is "Lamont Enterprises Ltd." It has a total capital of P500,000.00 broken down into P100,000.00 cash and computers worth P400,000.00, contributed byboth general and limited partners. The agreement was subscribed and sworn to by all the partners before a notary public but not recorded with the Securities and Exchange Commission.

Based on the foregoing:

a.Each partnership has a separate juridical personality.

b.I and II have separate juridical personality.

c.II and III have juridical personality.

d.None of the partnership has a separate juridical personality.

10.Which of the following statements concerning the name of the partnership is false?

a.The partnership name may include the name of only one of the partners.

b.The partnership name may include the names of two or more, but not all the partners.

c.The partnership name may include the names of all the partners.

d.The partnership cannot adopt a name which does not include the nae of at least one of the partners.