TEST BANK

PARTNERSHIP
1. All present properties are
contributed
A. Universal partnership
B. General partnership
C. Limited partnership
D. None of the above

2. Composed of capitalist and

industrial partners
A. Universal partnership
B. General partnership
C. Limited partnership
D. None of the above

3. Partners shall enjoy practically all the profits:

A. Universal partnership
B. General partnership
C. Limited partnership
D. None of the above

4. 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

5. They have priority if the partnership is insolvent

A. Separate creditors
B. Partnership creditors
C. Both A and B
D. None of the above

6. May contribute money, property or industry to the common fund

A. Both general and limited partners
B. Limited partner
C. General partners
D. Capitalist partners

7. One who takes charge of the winding up to partnership affairs upon dissolution:
A. Silent partner
B. General partner
C. Ostensible partner
D. Liquidating partner

8. B and C are partners, A contributed his services only; B, 20,000 and C, 10,000. The partnership was
liquidated, After payment of the partnership's obligation. only 9,000 worth of assets remained, The share of
A will equal to:
A. P 3,000
B. Equal of share of B
C. Equal of share of C
9. 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 utter the constitution of the partnership,
C. All the properties which belonged to each of the partners at time or 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.

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. 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

12. B and C are partners in a partnership. C contributed his industry. After payments of the partnership's
obligations. Only 6,000 cash remain. No other assets. In the absence of terms to the contrary, the share of C
in the remaining assets is:
A. Equal to share of A
B. Equal to the share of B
C. 2,000
D. Nothing

13. X. Y and Z are equal partners of XYZ Partnership. A owes the XYZ Partnership for 9,000. Z, a partner
collected from A, 3,000 before X and Y received anything. Z issued a receipt on the 3,000 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 3,000
B. Z cannot be required to share X and Y with the 3,000
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 3,000

14. A and B are partners in a 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 to 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 ABC Partnership, D represented himself as a partner in ABC Partnership to E,
who, on the belief of such representation. Extended 50,000 credit to ABC Partnership. Assuming only B
and C consented to such representation, who will be held liable to E?
A. E extended the credit to ABC Partnership, so a partnership liability exists. thus, all the partners, A, B
and C are liable
B. B, C and D are partners by estoppels and thus, are liable prorate to E
C. Partners A, B and C who benefited from the credit extended by E are liable
D. D who nude the representation is liable to E

16. A and B are partners in a real estate business, A and B were approached by X who offered to buy a parcel of
land owned by the partnership. Thereafter. B sold to A, B's share in the partnership. Then. A sold the land to
X at a big profit.
A. A is liable to B for B's share in the profits
B. The partnership is dissolved when A became the sole
owner
C. A is not liable to B for the latter's share in the profits
D. The sale of the land to X void.

17. 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

18. A and B are equal partners in AB Partnership. Y represented himself as a partner in AB Partnership to Z,
who relying on such representation, extended of 50,000 credits to AB Partnership. Of the two partners
only, B knew and consented to 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 (2)
partners and Y are liable,
C. Partners A and B who benefited from the credit extended to the partnership AB Partnership shall be
liable to Z
D. B and Y are partners by estoppel and, thus, are liable to Z.

19. The following persons are disqualified to form a universal partnership. Who are the exceptions?
A. Brother and sister
B. Husband md 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.

20. 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. partnership will bear the losses
B. If there are profit, the profits will be shares 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.

21. A is the managing partner of ABC Partnership. X owes A personally and ABC Partnership 20,000 each, A
collected and receive from X, 10,000 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 be applied in proportion to both credits
C. The amount received will be in the credit of A
22. Three (3) of the following are similarities between a partnership and a corporation. Which is NOT?
A. The individuals composing both have little voice in the conduct or the business
B. Both have juridical personality separate and distinct from that of the individuals composing them.
C. Like a partnership, a corporation can act only through agents
D. Both are organizations composed of an aggregate of individuals

23. A, B and C are general partners in ABC Partnership. A, the managing partner engaged personally in
a business that is the same as the business of the partnership without the consent of B and C.
A. If there are profits, A will give the profits to the partnership
B. If there are losses, the partnership will bear the losses
C. If there are profits, they will be shared by partner A and the ABC Partnership
D. The profits or losses will be shared equally by A and the ABC Partnership

24. Three (3) of the following are rights off a general partner and also of a limited partner in a limited partnership.
Which is not?
A. To inspect and copy at reasonable hours the books of the partnership and have them kept at the
principal place of business
B. To demand true and full information of all matters affecting the partnership and a formal account of
partnership affairs.
C. To have dissolution and winding up by decree of court
D. None of the above.

25. The partnership is insolvent. These are preferred as regards to the partnership property.
A. Partnership creditor
B. Partners separate creditors
C. Partners with respect to their capita
D. Partners with respect to their profits

26. Bears the loss off property contributed to the partnership

A. Capitalist partner
B. Limited partner
C. None of the above
D. Partners contributing usufructuary rights

27. When cash or property worth P3,000 or more is contributed as cap' tal. The Articles of Co Partnership shall
be in a public instrument and be registered with the Securities and Exchange commission. If the said
requirements are not complied with:
A. It will render the partnership void.
B. It will not affect the [ability of the partnership and the partners to third parties.
C. It will not give a legal personality to the partnership
D. It will give the partnership a de-facto existence.

28. A, B and C are equal partners in Santos Brothers Partnership. The partnership is indebted to PC for P
150,000. Partner A is indebted to SC for P20,000 PC attached and took all the assets of the partnership
amounting to P90,000. B and C are solvent while A is insolvent and all what he owns is a land valued at 15,
000.
A. SC has the priority to the land of A as a separate creditor.
B. PC has priority to the land of A to cover A's share of the 60,000-remaining liability of the partnership
C. B and C have priority to the land of A if they paid PC the 60,000-remaining liability of the partnership.
D. PC and AC shall have priority to the land of A in proportion to their claim of 60, 000 and 20, 000
respectively.
29. A partnership is not dissolved upon the death of a:
A. General partner
B. Industrial partner
C. Limited partner
D. General limited partner

30. A and B are equal partners in AB Partnership C contacted XYZ and Co. and represented himself as partner in
AB Partnership. XYZ and Co. contacted A who confirmed that C is in fact a partner of AB Partnership XYZ
and Co, extended credit to C for AB Partnership in the amount of Who is liable to XYZ and Co.?
A. A and C are partners by estoppels and are liable to XYZ and Co.
B. XYZ and Co. extended the credit to C for AB Partnership, so a partnership liability exists, so both
partners, A and B together with C are liable.
C. The AB Partnership benefited, so it is liable
D. Only C who made the representation is liable

31. A, B and C are partners 'n a trucking and freight business. B and C without the know edge of A approached X
and offered to sell to X all the trucks of the partnership at a price very much higher than the 'r book value-
Then B and C bought-out A from the partnership and thereafter X bought all the trucks with a big profit of B
and C.
A. The sale of the trucks to X is void because it is without the knowledge and consent of A.
B. B and C are not liable to A whatsoever
C. B and C are liable to Afar his share in the profits in the sale.
D. When A was bought-out of the partnership, the partnership was dissolved so A has no more share in the
profits in the sale.0

32. When the capital (of a partnership) is P3,000 or more, it must be in a public instrument and must be
recorded with the Securities and Exchange Commission (Article 1772). A, B and C agreed to form a
partnership and each contributed P10, 000 as capital of the partnership. There was no compliance in the
provisions of Article 1772.
A. The partnership was not established
B. The partnership did not have juridical personality
C. The partnership was established and any partner may compel the execution of a public instrument
D. The partnership is void

33. A, as a partner contributed P30,000; B as partner, P15,000; and C as industrial partner, his services in the
partnership. After payment of all liabilities and expenses, only P18,000 remain as partnership assets.
A. A, 12,000; B, 6,000; C, None
B. A, 6,000; B, 6,000; C, 6,000
C. A, 9,000; B, 9,000; C, None
D. A, 8,000; B, 4,000, C, 6,000

34. This is the order of preference in the liquidation of a partnership

A. 1. Outside creditors
2.Partners with respect to their capital
3.Partners with respect to their profit
4.Partners aside from capital and profit

B. 1. Partners with respect to their capital

2. Partners with respect to their profit
3. Partners aside from capital and profit
4.Outside creditors

C. 1. Outside creditors
 2. Partners aside from capital and profit
3. Partners with respect to their capital
4. Partners with respect to their profit

D. 1. Partners aside from capital and profit

2. Outside creditors
3. Partners with respect to their capital
4. Partners with respect to their profit

35. Three (3) of the following are rights of a partners. Which one is nut?
A. Right to associate another person to his share
B. Right to admit another partner
C. Right to inspect and copy partnership beck
D. Right to ask dissolution of the firm at the proper time
36. The following are similarities between partnership and a corporation. Which is the exception?
A. Both have juridical personalities separate and distinct from that of the individuals composing them.
B. Like a partnership, a corporation can act only through agents
C. Both ale organization of an aggregate of individuals
D. The individuals composing both have little voice in the conduct of the business.

37. In the partnership of A, B and C, A was appointed in the Articles of Co-Partnership as managing partner. As
such manager in good faith:
A. His power is revocable even without consent
B. His power can be revocable at any time even without just cause provided
C. He may execute all acts of administration despite the opposition of B and C
D. He can be removed for valid cause even without the vote of the partners owning the controlling interest

38. In the ABC Partnership, A and B contributed 20,000 each and C, his services. After paying all the creditors
of the partnership, only P 18,000 in cash remains. In the absence of terms to the contrary, the share of C is
equal to:
A. P 6,000
B. The share of A
C. The share of B
D. Nothing

39. X and Y established a partnership by contributing, each at P50,000. Z, a third party allowed his name to be
included in the firm name of the partnership. The partnership was insolvent and after exhausting all the
remaining asset. there was left a liability to third persons the amount of P30.000. The creditors can compel:
A. Z to pay P30,000 remaining liability
B. X, Y and Z to pay P10,000 each
C. X or Y to pay P30,000 remaining liability
D. X and Y to pay P15,000 each

40. W, X, Y and Z formed a partnership. W, X and Y are general partners and contributed P50,000 each while
Z, an industrial partner contributed his services only. All the partners signed an agreement stipulating that
the liability of W is limited to its contribution. After all the assets of the partnership were exhausted there
remains an unpaid liability of P40,000. The creditors of the partnership can compel:
A. X and Y to pay the P40,000
B. X, Y, and Z to pay the P40,000
C. W, X, Y. and Z to pay P10,000 each and W and Z can demand reimbursement from X and Y
D. X and Y to pay P40,000

41. A partner in a partnership who is not really a partner, not being a party to the partnership agreement, hut is
made liable as a partner for the protection of innocent third persons is known as
A. Secret partner
 B. Dormant partner
C. Nominal partner or partner by estoppel
D. Answer not given

42. A and B are capitalist partners, with C as industrial partner. A and B contributed P15,000 each to the capital
of the partnership. A contractual liability of P40,000 was incurred by the partnership in favor of X. The
capital assets of P30,000 shall first be exhausted thereby leaving an unsatisfied liability of P10,000. X can
recover the amount from:
A. A and B only
B. A, B and C
C. A, B and C and C can recover for reimbursement from A and B
D. Answer not given

43. A, B and C are partners engaged in a retail business. Their contribution is P20,000 each. D is admitted as a
new partner with a contribution of P8,000. At the time of his admission, the partnership has an outstanding
obligation to E in the amount of P80,000. In this ease:
A. D is not liable to E for this obligation
B. D is liable to E for this obligation so that amounting to P68,000 will be exhausted leaving a balance of
P12,000. Only A, B and C shall be liable jointly or pro-rata, out of their separate property.
C. D is liable to E for this obligation so that after the assets of the partnership will be exhausted, leaving a
balance of P 12,000, all the partners shall be liable jointly or pro-rata, out of their separate property.

44. A, B and C are general partners in ABC Partnership. D is a debtor to the partnership in the amount of P15 000. A
received from Debtor D the sum of P5,000 and issued a receipt identifying the amount as his share. Then D
became insolvent, B and C cannot collect the P10,000.
A. A cannot be compelled to share the P5,000 with B and C
B. B and C can charge the capital of A with their share of the P5,000
C. A can be compelled to share Band C the P5,000
D. B and C automatically sue D to collect the P10,000

45. M and O are partners of M & O Partnership. M is the managing partner. N owes M P10,000 and M & O
partnership P30,000. The obligations of N are both due. M collected from N the debt of N to M in the
amount of P10,000 and issued a receipt in the name of M. To which obligation will the P10,000 be
applied?
A. The whole of the P10,000 be applied to debt of N to M
B. The P10,000 be applied to debt of N to M and to the partnership
C. P5,000 each of debt of N to M and to the partnership
D. P2,500 to debt of N to M and P7,500 debt of N to the partnership

46. A, B and C are partners in D-3 Partnership. On April 29, 2010, partner C died. Nat knowing that C died, on
May l, 2010, A contracted a liability to D who also do not know the death of C. The partnership debt is in the
amount of P30,000, he can collect
A. P30,000 from A
B. P15.000 from A and P 15,000 from B
C. P10,000 from estate of C; P10,000 from A; P10,000 from B
D. P20,000 from A and P10,000 from B

47. This the order of preference in the liquidation of a general partnership:

A. Outside creditors; Partner as creditors; Partners capital; Partners profit
B. Partner as creditors; Outside creditors; Partners capital; Partners profit
C. Partners’ capital; Outside creditors; Partners as creditors; Partners profit
D. Outside creditors; Partner capital; Partners profit; Partners as creditors
48. R, S and T are partners. T is the industrial partner who in addition to his services, he also contributed
capital to the partnership. There is no stipulation as to sharing of profits and losses, The partnership
realized profits of P21,000. The share of T in the profits:
A. Rand will determine T's share I, in the profit
B. T's share is P7,000
C. Pro-rata to his contributed capital
D. Nothing, because he is an industrial partner

49. W A, Y and Z are partners. They contributed capital as follows: W, P50,000; X, P30,000; Y, P20,000 and Z,
is an industrial partner, his services. The partnership's obligation to outsiders exceeds the total net assets by
P18,000. Who and by how much will the partners he liable for the payment of the P 18,000?
A. W-P9,000; X-P5,400; Y-P3,600; Z-0
B. W-P4,500; X-P4,500; Y-P4,500; Z-P4,500
C. W-P6,000; X-P6,000; Y-P6,000; Z-6,000
D. W-4,500; X-P2,700; Y-P1,800; Z-P9,000

50. Which of the following is a characteristic of partnership as a contract?

A. Formal
B. Innominate
C. Gratuitous
D. Preparatory

51. One who takes active part in the business, but is not known to be a partner by outside parties is:
A. Silent panner
B. Dormant partner
C. Nominal Partner
D. Secret Partner

52. Can the partners stipulate that the newly admitted partner shall not be held liable for the obligations
of the partnership arising before his admission? Which of the following statement is not correct?
A. No, because the newly admitted partner Should be deemed to have assumed all the debts of the
partnership upon his voluntary participation in the partnership.
B. No, because newly admitted partner is liable with respect to his capital contribution which forms part of
the partnership
C. No, because the third person are always protected by law.
D. No, because the subject of the stipulation is that the liability or the new partner should not be satisfied
out of the partnership property.

53. May contribute money. property or industry to the common fund:

A. General partner
B. Industrial partner
C. Limited partner
D. Managing partner

54. A limited partner who takes active part the management of the firm becomes:
A. A managing partners
B. Liable as a general partner
C. A general partner
D. A general partner and a limited partner the same time

55. Which of the following statements is not correct?

A. A general partner in a limited partnership manages the business of the partnership but cannot perform
acts of ownership Without the consent of the limited partners
B. Valid contributions of a limited partner are money and property but not services.
 C. Additional limited partners may be admitted into the 'mired partnership with the consent of all the
partners.
D. A person who is both a general partner and a limited partner is deemed a limited partner only with
respect to the return of his contribution.

56. Which of the following is an essential element of partnership?

A. There must be a contribution of money, property, ur industry to a common fund.
B. It must an association for profit with the intention to divide the profits among themselves.
C. There must be a valid and voluntary agreement,
D. All of the above.

57. Which of the following liabilities of the partnership shall rank first in the order of payment'!
A. Those owing to creditors other than partners
B. Those owing to panners in respect to profits
C. Those owing to partners in respect to capital
D. Those owing to partners other than for capital and profit