Law on Partnership and Corporation Reviewer PDF

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Law on Partnership and Corporation Reviewer What is the order of payment of liabilities of a dissolved general partnership using the code number representing each liability? i. Those owing to partners than for capital or for profits ii. Those owing to creditors other than partners iii. Those owing t...

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Law on Partnership and Corporation Reviewer 1. What is the order of payment of liabilities of a dissolved general partnership using the code number representing each liability? i. Those owing to partners than for capital or for profits ii. Those owing to creditors other than partners iii. Those owing to partners in respect of profits iv. Those owing to partners in respect of capital a) i, ii, iii, iv b) ii, i, iv, iii c) ii, i, iii, iv d) i, ii, iv, iii 2. 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 3. A and B entered into a universal partnership of all present property. The common property of the partnership shall be: a. All the properties which belonged to each of the partners at the time of the constitution of the partnership. b. All the properties which belonged to each of the partners after the constitution of the partnership. c. All the properties which belonged to each of the partners at the time of the constitution of the partnership as well as the profits which they may acquire therewith. d. All the properties which belonged to each of the partners at the time of the constitution of the partnership as well as the profits which they may acquire thereafter. 4. If a partner in a partnership is insolvent, the first order of preference in the distribution of his assets are: a. Partnership creditors b. Partners contribution to the partnership c. Separate creditors of the debtor d. Pro-rata between the separate creditors of the debtor and the partnership creditor 5. 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 6. Three of the following contracts are void. Which is not? a. A universal partnership of all present property between husband and wife. b. A universal partnership of profits between a man and a woman living together as husband and wife without benefit of marriage c. A particular partnership between husband and wife d. A universal partnership of profits between a private individual and a public officer

7. S1: A partnership is created by mere agreement of the partners while a corporation is created by operation of law. S2: In a partnership, juridical personality commences from the execution of the articles of partnership; in a corporation, from the issuance of certificate of incorporation by the Securities and Exchange Commission. a. True; True b. True; False c. False; False d. False; True 8. The minimum capital in money or property except when immovable property or real rights thereto are contributed, that will require the contract of partnership to be in a public instrument and be registered with the Securities and Exchange Commission (SEC). a. P 5,000.00 b. P 3,000.00 c. P 3,001.00 d. P 10,000.00 9. If the partnership has a minimum capital mentioned in No. 8, but the contract is not in a public instrument or the same is not recorded with SEC, the partnership: a. Is voidable b. Is void c. Still acquires juridical personality d. Does not acquire juridical personality 10. A capitalist partner engaged for his own account in an operation which is of the kind of business in which the partnership is engaged. Said partner can be a. Compelled to sell his interest in the partnership to the other capitalist partners b. Compelled to dissolve or discontinue the operation of his business c. Compelled to bring to the common funds of the partnership any profits accruing to him from his transactions d. Denied his share in the profits of the partnership 11. Armando and Betty are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership? a. There is a partnership because of the equal sharing of profits b. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits c. There is no partnership since in partnership division of profits is not always necessary among partners d. There is partnership they being co-owners and co-possessors 12. One who takes charge in the winding up to partnership affairs upon dissolution: a. Silent partner b. General partner c. Ostensible partner d. Liquidating partner 13. They have no voice in the management of partnership affairs a. Managing partners b. Silent partners

c. Both A and B d. None of the above 14. A and B are partners in a real estate partnership. The partnership owns a piece of land which C desired to buy. C contacted A and inform him of his desire to buy the land and A did not tell B about it. A bought B out of the partnership and afterwards sold the land to C with a big profit. a. The partnership is dissolved when A became the sole owner b. The sale of the land to C is void because it was without the knowledge of B c. A is not liable to B for the latter’s share in the profits d. A is liable to B for the latter’s share in the profits 15. A, B and C are partners in a partnership. C contributed his industry. After payments of the partnership’s obligations, only P6,000 cash remains. No other assets. In the absence of terms to the contrary, the share of C in the remaining assets is: a. Equal to the share of A b. Equal to the share of B c. P2,000 d. Nothing 16. X, Y and Z are equal partners of XYZ Partnership. A owes the XYZ Partnership for P9,000. Z, a partner collected from A, P3,000 before X and Y received anything. Z issued a receipt on the P3,000 as his share of what A owes. When X and Y collected from A, A was insolvent. a. Partner Z shall share partners X and Y with the P3,000 b. Z cannot be required to share X and Y with the P3,000 c. X and Y should first exhaust all remedies to collect from A d. X and Y can automatically deduct from the capital contributions of Z in the partnership their respective share in the P3,000 17. The following persons are disqualified to form a universal partnership. Who are the exception? a. Brother and sister b. Husband and wife c. Those guilty of adultery and concubinage d. Those guilty of the same criminal offense, if the partnership is entered into a consideration of the same. 18. Composed of capitalist and industrial partners a. Universal Partnership b. General Partnership c. Limited Partnership d. None of the above 19. __________ is a partnership formed between a member of a partnership and a third person for a division of the profits coming to him from the partnership enterprise. a. Partner by estoppel b. Subpartner c. Limited Partner d. None of the above 20. These are the rights not acquired by an assignee or transferee of a partner who conveys all his interest in the partnership except a. To interfere in management b. To avail himself of the usual remedies provided by law in case of fraud in management

c. To require any information or account d. To inspect any of the partnership book 21. One of the following incidents may be a cause for involuntary dissolution of a partnership. Which is? a. Termination of the term of the partnership b. Insolvency of any partner c. Express will of any partner d. Expulsion of any partner 22. A and B are equal partners in AB Partnership. Y presented himself as a partner in AB partnership to Z, who relying on such representation, extended P50,000 credit to AB Partnership. Of the two partners only B knew and consented the representation of Y. Who should be held liable to Z? a. Only Y, who presented himself as partner is liable. b. Since the credit was extended to AB Partnership, a partnership liability was created, so the two partners and Y are liable. c. Partners A and B who benefited from the credit extended to the partnership AB shall be liable to Z d. B and Y are partners by estoppel and, thus, are liable to Z. 23. A is the capitalist partner and B the industrial partner. A is engaged personally in the same kind of business the partnership is engaged in. a. If there are losses, the partnership will bear the losses b. If there are profits, the profits will be shared by A and the partnership c. If there are profits, A will give the profits to the partnership d. A will be excluded from the partnership and pay damages 24. A is the managing partner of ABC Partnership. X owes A personally and ABC Partnership P20,000 each. A collected and received from X, P10,000 and he issued a receipt wherein it is stated that the amount is applied against his personal credit. a. The amount received will be applied in favor the partnership credit b. The amount will be applied in proportion to both credits c. The amount received will be applied in the credit of A d. None of the above 25. All present properties are contributed a. Universal Partnership b. General Partnership c. Limited Partnership d. None of the above 26. Partners shall enjoy practically all the profits a. Universal Partnership b. General Partnership c. Limited Partnership d. None of the above 27. May contribute money, property or industry to the common fund a. Both General partners and Limited partner b. Limited Partners c. General Partners d. Capitalist Partners

28. The following are characteristics of partnership except a. Commutative b. Preparatory c. Principal d. All are characteristics of partnership 29. S1: The partnership name must include the name of one or more partners. S2: Non-member of the partnership may be included in the name of the partnership a. True; True b. True; False c. False; True d. False; False 30. It is a liability where partners are liable equally or jointly and not proportionally a. Pro rata Liability b. Subsidiary Liability c. General Liability d. None of the above 31. Partners Arnold, Ben and Charlie contributed: Arnold – P1, 000,000; Ben – P2, 000,000; and Charlie – service. After exhausting the partnership assets, the creditors still have a claim for P300, 000. For how much are the partners liable to the creditors for the partnership liability? a. Only Arnold and Ben are liable equally to the creditors being capitalists. b. Only Arnold and Ben are liable at 1/3 and 2/3, respectively c. All of Arnold, Ben and Charlie are liable pro rata to the creditors d. Charlie is not liable being an industrial partner who is exempt from losses 32. Armando and Betty are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership? a. There is a partnership because of equal sharing of profits b. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits c. There is no partnership since in partnership division of profits is not always necessary among partners d. There is partnership they being co-owners and co-possessors 33. Normelita and Garcia are partners in NG Partnership. While Normelita was performing her duties as a partner in the conduct of the business, he negligently caused damage to Eddie, a third person. Who shall be liable to Eddie and in what capacity? a. Only the partnership shall be liable it being a juridical person separate and distinct from the partners’ b. Only Normelita shall be liable for she is the only one at fault c. Both Normelita and Garcia shall be liable solidarily to Eddie d. Normelita, Garcia and the partnership are all liable solidarily to Eddie 34. Petalcorin is indebted for P5,000 to JDS Trading Company, a partnership managed by Dulzura to whom Petalcorin also owes P10,000.00. The two debts which are both demandable are unsecured. Petalcorin remits P4,500.00 to Dulzura issues a receipt for her own credit. To which credit should the payment be applied? a. To Dulzura’s credit because the payment made by Petalcorin is intended for his debt to Dulzura who issues her own receipt.

b. To both the partnership credit and Dulzura’s credit proportionately at P1,500.00 and P3,000.00, respectively. c. To Dulzura’s credit because its amount is greater than that of the partnership credit. d. To the partnership credit because the managing partner should not prefer her own interest to that of the partnership. 35. Joseph, Aris, Dex and Earl are partners in JADE Enterprises, a jewelry store, with Joseph contributing P50,000.00; Aris, P20,000.00; and Dex, P30,000.00. Earl is an industrial partner manages the partnership. Based on the foregoing information, which one of the following statements is false? a. Joseph may engage in the buying and selling of rice without the consent of the other partners b. Earl may engage in the buying and selling of rice without the consent of the other partners c. Earl is not liable for the losses of the partnership d. Earl may be held liable by third persons for partnership debts with her separate property 36. MARILEN Company is owned by the following partners with their respective contributions: Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna, P100,000.00; and Nora, P200,00. Except for Edna and Nora, all the rest are managers without any specification as to their respective duties. Mary wants to buy goods from Excellent Company. Liza opposes. Anna and Rose side with Mary while Irma sides with Liza. a. The group of Mary will prevail because they constitute the majority. b. The group of Liza will prevail because they constitute the controlling interest. c. The group of Mary will prevail because they constitute the controlling interest. d. Suppose Rose abstains, the group of Mary will prevail. 37. Who of the following cannot join a universal partnership? a. Man and woman “lived in” b. Convicted habitual swindler c. Married woman and his lover d. All of the above 38. Without agreement, the partners shall contribute to the partnership capital a. Any share they like b. Equal shares c. Proportionate shares d. Answer not given 39. Roxanne promised to contribute a pink Nissan 2012 car model worth P1.5 million to the firm. By making such promise, what shall be her obligations to the firm? a. To deliver such car b. She is bound for warranty against eviction c. To deliver its fruits without demand d. All of the above 40. May be required to make additional contribution in case of imminent loss a. Capitalist partner b. Limited partner c. Industrial Partner d. A, B and C

41. A newly admitted general partner is liable to creditors existing at the time of his admission and his liability is a. Up to his capital contribution if there is a stipulation b. Up to his separate property even there is no stipulation c. Up to his capital contribution even if there is a stipulation d. Up to his separate property only if there is a stipulation 42. Using the preceding number, but the obligations were contracted after his admission, which of the following is correct? a. He is liable to the creditors before and after his admission up to his separate property b. He is liable to the creditors before and after his admission only up to hi capital contribution c. He is liable to the creditors before and after his admission up to his capital contribution and the creditors after his admission up to his separate property d. He is not liable to creditors existing before admission 43. S1: Every partner may associate another person with him in his share, but the associate shall not be admitted in the partnership without the consent of all the other partners, even if the partner having an associate should be a manager S2: Articles of universal partnership, entered into without specification of its nature, only constitute universal partnership of profits a. True; True b. True; False c. False; True d. False; False 44. S1: Persons who are not partners as to each other are not partners as to third persons, except in cases of estoppel S2: An admission or representation made by any partner concerning partnership affairs is evidence against the partnership a. True; True b. True; False c. False; True d. False; False 45. S1: In the absence of stipulation, the share of each partner in the profits and losses shall be equal to each other S2: A stipulation which excludes one or more partners from any share in the profits and losses is void, as a general rule a. True; True b. True; False c. False; True d. False; False 46. S1: Persons who are prohibited from giving each other any donation or advantage cannot enter into universal or particular partnership S2: A partnership begins from the moment of the execution of the contract, unless otherwise stipulated a. True; True b. True; False c. False; True d. False; False

47. S1: A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners S2: When an unlawful partnership is dissolved by a juridical decree, the profits and partners’ contributions shall be confiscated in favor of the State a. True; True b. True; False c. False; True d. False; False 48. Three of the following are rights of a partner. Which one is not? a. Right to associate another person to his share b. Right to admit another partner c. Right to inspect and copy partnership books d. Right to ask dissolution of the firm at the proper time 49. One or more but less than all the partners have no authority to perform the following acts except: a. Do any act which make it impossible to carry on the ordinary business if the partnership b. Submit a partnership claim or liability to arbitration c. Renounce a claim for the partnership d. Convey partnership property in ordinary course of partnership business 50. When the manner of management has not been agreed upon, who shall manage the affairs of the partnership? a. Capitalist partners b. Industrial partners c. Capitalist-Industrial partners d. All of the partners...