Last Updated on: 18th July 2024, 01:34 pm
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Complete resources on Partnership Act
Complete resources on Partners of Firm
Partners of Firm MCQ
- Every partner has a right to :
(a) Be remunerated
(b) Be consulted
(c) Use Partnership Property for personal benefit
(d) All of these.
Every partner has a right to be consulted in all matters affecting the business of the partnership. But no partner is entitled to receive any remuneration in taking part in conduct of the business and carry on their own business. They are also not entitled to use partnership property for personal benefit. Hence, option (b) is the correct answer. - Every partner of the firm has a right to access and to inspect all the books of the firm:
(a) Personally
(b) Through his agent
(c) Through his legal representative
(d) Any of the above.
Every partner of the firm has a right to access and to inspect all the books of the firm either personally, or through his agent, or through his legal representative. Hence, option (d) is the correct answer. - When a Partner has advanced any loan to the Firm providing for interest, without specifying any rate in the agreement, the rate shall be
(a) Simple interest 6% p.a
(b) Simple interest 10% p.a
(c) Simple interest 15% p.a
(d) No Interest to be paid p.a
In absence of specific provisions in the Deed, a partner is entitled to claim interest on any payment or advance beyond the amount of capital he has agreed to subscribe, simple interest @ 6% p.a. Hence, option (a) is the correct answer. - Where a partner is entitled to interest on his capital, as specified in deed, shall be payable out of
(a) Capital
(b) Profits
(c) Reserves
(d) Liquid assets of the firm.
According to s.13(c), any interest on capital, subject to contract between the partners, is payable only out of profits earned by the firm. Hence, option (b) is the correct answer. - Under the Indian Partnership Act, 1932, in the absence of an agreement, a partner is
(a) To be paid a minimum salary
(b) To be paid salary if he is a Nominal Partner
(c) To be paid salary if he is a sub-partner only
(d) Not to be paid salary.
Under the Indian Partnership Act, 1932, in the absence of an agreement, a partner (including Nominal partner) is not to be paid salary. Hence, option (d) is the correct answer. - The agreement between the Partners not to carry on the business other than the business of the firm, is considered to be
(a) Valid
(b) Void
(c) Voidable at the option of the partner
(d) Illegal.
The agreement between the partners may provide that a partner shall not carry on any business other than the business of the firm as long the partner continues to be a partner in the firm. Such agreement is legally enforceable. Hence, option (a) is the correct answer. - In relation to a Firm or Partnership, “Third Party” means
(a) A relative of a Partner
(b) Lineal ascendant of a Partner
(c) Legal representative of a deceased Partner
(d) Any person other than the Partner in the Firm.
In relation to a Firm or Partnership, “Third Party” means any person who is not a Partner in the Firm. Hence, option (d) is the correct answer. - A, B, C are members of a banking firm. D, who owes the firm, Rs.5,000 pays it to A. A without informing B and C about the payment by D, misappropriates the amount. Is D discharged of his debt to the firm by the payment made to A:
(a) Yes, D is discharged of his debt
(b) No, D is not discharged of his debt
(c) D will be discharged with the consent of B and C
(d) D will be discharged with the consent of registrar of firm.
According to s.19 of the Partnership Act, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm bind the firm, this authority of the partners is called Implied Authority. In this case, D has made payment to A to carry on, in the usual way, the business of the firm which binds the firm. So, D is discharged of his debt to the firm. Hence, option (a) is the correct answer. - Every partner of a ………. Firm has implied authority to borrow money for the business of the firm.
(a) Medical Practitioners
(b) Audit firm
(c) Lawyer’s
(d) Trading.
In a Trading firm, every partner has implied authority to borrow money on the credit of the firm. Hence, option (d) is the correct answer. - M and N are partners in a firm dealing in garments. M placed an order in the firm’s name and on the firm’s letter head for 5 bottles of wine to be supplied at his residence for own consumption.
(a) The firm is not liable for M’s Act
(b) The firm is liable for M’s Act
(c) M has acted within his implied authority
(d) M has acted within his express authority
The implied authority of a partner is linked with the nature of the business and usual manner of carrying it. If an act is done by a partner on behalf of the firm but the same is not for the purpose of carrying on the partnership business of the firm in the usual way, it will not bind the firm. In this case, X placed an order for 5 bottles of wine for his personal consumption in the firm’s name. So, the act done by X does not relate to the normal business of the firm and consequently the firm is not liable for X’s act. Hence, option (a) is the correct answer. - The implied authority of a partner in a firm does not empower him to
(a) Borrow money on the credit of the firm
(b) Settle accounts with the persons dealing wit the firm
(c) Pledge any goods of the firm for borrowing money
(d) Enter into partnership on behalf of the firm.
According to s.19(2), in the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to enter into partnership on behalf of the firm. Hence, option (d) is the correct answer. - A change in nature of business can be effected only by:
(a) Unanimous consent of all partners
(b) Consent of majority partners
(c) Consent of active partners
(d) Consent of partners by estoppel.
Unanimous consent of all partners is essential to change the nature of business. Hence, option (a) is the correct answer. - A Firm is said to be reconstituted in case of :
(a) Admission of a partner
(b) Retirement of a partner
(c) Expulsion or death of a partner
(d) All of the above.
A partnership firm is said to be reconstituted in case of admission of a partner, retirement of a partner, expulsion or death of a partner. Hence, option (d) is the correct answer. - Where a new Partner agrees to bear past liabilities, he will be liable for such liabilities to:
(a) All Debtors of the Firm
(b) The Firm
(c) All Creditors of the Firm
(d) None of the above.
By mutual agreement, the new partner may agree with the old partners to be liable for the past liabilities of the firm. However, it does not give a right to the creditors of the firm to proceed against the new partner for the recovery of their past debts in the absence of privity of contract. Hence, option (b) is the correct answer. - A new partner can be admitted in the firm with the consent of:
(a) Unanimous consent of all the partners
(b) Consent of the majority of the partners
(c) Registrar of Firms
(d) Nominal partner only.
A new partner can be admitted into the firm with the consent of all the partners. Hence, option (a) is the correct answer. - A retired partner continues to be liable for the acts done by any of the partners after his retirement if:
(a) Public notice of his retirement is not given
(b) All creditors of the firm do not discharge him from his liability
(c) The other partners do not discharge him from his liability
(d) He gives public notice of his retirement.
If a retired partner does not give public notice of his retirement, he continues to be liable for the acts done by any of the partners after his retirement. Hence, option (a) is the correct answer. - To avoid liability to third parties, public notice of retirement of a partner should be given by :
(a) Retired partner only
(b) Any partner of the reconstituted Firm only
(c) Retired partner or any partner of the reconstituted Firm
(d) No such notice is to be given.
According to s.32 (4), the public notice of the retirement of a partner may be given either by the retired partner or any of the partners of the reconstituted firm. Hence, option (c) is the correct answer. - Retiring partner continues to be liable for acts of the firm done:
(a) Upto the date of giving public notice of retirement
(b) Upto the close of the financial year in which he retires
(c) Upto the dissolution of the firm
(d) Upto the date of his retirement.
According to s.32 (3), a retired partner, along with other partners at the time of his retirement, continues to be liable as partner to third parties for any act done by any of them after the retirement of the partner until a public notice of retirement is given. Hence, option (a) is the correct answer. - Where the continuing partners carry on the business of the firm without any final settlement of the claim of Outgoing Partner, he becomes entitled to:
(a) Share of profits proportionate to his share in the property of the firm
(b) 6% interest p.a. on the amount of his share in the property of the firm
(c) interest @15% p.a. on the amount of his share in the property of the firm
(d) interest @ 20% p.a. on the amount of his share in the property of the firm.
Where the continuing partners carry on the business of the firm, the Outgoing Partner whose claim is not settled, is entitled to such share of profits as is proportionate to his share in the property of the firm. Hence, option (a) is the correct answer. - A Retiring Partner may :
(a) Carry on a competing business
(b) use firm’s name
(c) represent himself to be a partner of the firm
(d) solicit the existing customers who were dealing with the firm before his retirement.
A retired partner may carry on a business competing with that of the firm and he may advertise such business, but, subject to contract to the contrary, he may not use the firm name, represent himself as carrying on the business of the firm or solicit the custom of persons who were dealing with the firm before he ceased to be a partner. Hence, option (a) is the correct answer. - Where a partner of a firm is adjudged insolvent
(a) He ceases to be a partner of the firm from the date on which the order of adjudication is made
(b) He ceases to be a partner of the firm from the date of application to the Court
for adjudication
(c) Firm is dissolved on the date of the order of adjudication
(d) The estate of the insolvent partner becomes liable for the acts of the firm done after the date of adjudication.
According to s.34(1), where a partner in a firm is adjudicated insolvent, he ceases to be partner on the date on which the order of adjudication is made, whether or not the firm is thereby dissolved. Hence, option (a) is the correct answer. - P, Q and R are partners in a Partnership Firm. Q dies on 3rd October whose accounts are finalized on 31st March of every year. Hence,
(a) Q’s estate is not liable at all
(b) Q’s estate is not liable for any acts of the Firm done after his death
(c) Q’s estate continues to be liable for all acts of the firm done after his death
(d) Q’s estate continues to be liable up to the financial year in which his death occurred.
s.35 lay down that the estate of the deceased partner will not be liable for any act of the firm done after his death. Hence, option (b) is the correct answer. - Ajit was a partner in a firm. The firm ordered goods in Ajit’s life time, but delivery was not made until after his death. The supplier of the goods claims to be paid out of Ajit’s estate. Advise Ajit’s representative :
(a) As there was no debt in respect of the goods in Ajit’s life time, his estate is not liable for the price in an action for goods sold and delivered
(b) The legal representatives of Ajit is liable for the price in an action for goods sold and delivered
(c) Ajit’s estate is liable for the ordered goods while he was partner
(d) None of the above.
According to s.35, where under a contract between the partners the firm is not dissolved by the death of a partner, the estate of the deceased partner is not liable for any act of the firm done after his death. Held, Ajit’s estate was not liable for the price in an action for goods sold and delivered as there was no debt due in respect of the goods in Ajit’s lifetime. Hence, option (a) is the correct answer. - The legal heirs of the Deceased Partner :
(a) Can become a partner in the firm of the deceased partner only if the surviving partners give their consent in this regard
(b) Can not become a partner in the firm of the deceased partner
(c) Automatically becomes the partner of the firm on death of a partner.
(d) None of the above
The legal heirs of the deceased partner can become a partner in the firm of the deceased partner only if all the surviving partners give their consent in this regard. Hence, option (a) is the correct answer.
