SET B

BUSLAW2 MIDTERM EXAM

Write only your Name, Student No. and Section on the upper left-hand corner of this page. Write your answers on the Answer
Sheet. Except for the above-mentioned entries, together with the Answer Sheet, please return the questionnaire UNMARKED,
otherwise you will get a failing grade for the Midterms. Cheating shall be severely dealt.

1. A, B, C and D are partners. Their contributions: A-P50,000; B-P30,000; C-P20,000; and D-services. They
have unpaid partnership debts. After exhausting partnership assets, there remained an unpaid balance of
P10000. Who should pay and how much each?

a. A-P5000; B-P3000; C-P2000; D-nothing c. A-P4000; B-P3000; C-P2000; D-P1000

b. A-P2500; B-P2500; C-P2500; D-P2500 d. A-P4000; B-P4000; C-P2000; D-nothing

2. One or more but less than all the partners have no authority to perform the following acts, except:

a. Any act that would make it impossible to carry on the ordinary partnership business
b. Submit a partnership claim or liability to arbitration
c. Renounce a partnership claim
d. Convey partnership property in the ordinary course of partnership business

3. All partners are solidarily liable with the partnership for the purpose of making good a loss:

a. Where a partner acting within the scope of his apparent authority receives money/property of a 3 rd person and
misapplies it
b. Where the partnership in the course of its business receives money/property of a 3 rd person and it is
misappropriated by a partner while the money/property in partnership custody
c. Where by any wrongful act or omission of any partner acting in the ordinary course of partnership business or with
the consent of his partners, loss or injury is caused to a person who is not a partner in the partnership
d. All of the above

4. A partnership is dissolved without violation of the partnership agreement by:

a. Termination of its definite term or particular undertaking

b. Express will of any partner, acting in good faith, when no definite term or particular undertaken is specified
c. Express will of all the partners who have not assigned their interests, before or after the end of any fixed term or
undertaking
d. Bona fide expulsion of any partner from the partnership business

5. Without the written consent or ratification of the specific act by all limited partners, general partner(s) have
no authority to:

a. Do any act in contravention of the certificate

b. Do any act making it impossible to carry on the ordinary partnership business
c. Confess judgment against the partnership
d. All of the above

6. In case of imminent loss of the business, the following partners must give additional capital, except:

a. Capitalist partner c. Capitalist-Industrial partner

b. General partner d. Industrial partner

7. The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in
the business, except where such profits were received in payment:

a. As a debt by installments
b. As wages of an employee or rent to a landlord
c. As an annuity to a widow or representative of a deceased partner
d. All of the above

8. A partnership which comprises all the profits that the partners may acquire by their work or industry
during the existence of the partnership is called

a. Universal partnership of all present property c. Particular partnership

b. Universal partnership of profits d. Partnership at will

9. A partnership without definite period of existence & that can be dissolved at any time by any of the
partners is called:

a. Universal partnership of all present property c. Particular partnership

b. Universal partnership of profits d. Partnership at will

10. A partner who has all the rights, power and subject to all the restrictions of a general partner but whose
liability is, among themselves, limited to his capital contribution is called:

a. General partner c. General-limited partner

b. Limited partner d. Dormant partner

11. Refers to persons who represent themselves, or consent to another or others to represent them to anyone
that they are partners:

a. General partnership c. Partnership by estoppel

 2
b. Limited partnership d. None of the above

12. Can only be made with the consent of all the partners:

a. Waiver or compromise c. Borrow money

b. Sell equipment d. None of the above

13. A partner who is not liable for the payment of partnership debts to the extent of his separate property after
the partnership assets are exhausted is called:

a. Managing partner c. General partner

b. Limited partner d. Silent partner

14. A, B and C are partners. Their contributions: A-P60,000; B-P40,000; C-services. They did not agree on how
to divide profits and losses. If there is a P10,000 loss, how should they share the loss?

a. A-P6000; B-P4000; C-nothing c. A-P3500; B-P3500; C-P3000

b. A-P3000; B-P2000; C-P5000 d. A-P3500; B-P2000; C-P4000

15. As a general rule, a partner cannot ask for a formal accounting of the affairs of the partnership during its
existence and before it is dissolved, except:
a. When he is wrongfully excluded from the partnership business
b. When the right exists under the terms of any agreement
c. When circumstances render it just and reasonable
d. All of the above

16. A partnership is automatically dissolved, except:

a. By the death of any partner

b. By the insolvency of any partner or of the partnership
c. By the civil interdiction of any partner
d. By the insanity of any partner

17. If a partner is insolvent, “the 1st order of preference in the distribution of his assets is:

a. Partner’s contribution to the partnership

b. Partnership creditor
c. Separate creditor of the partner
d. Pro-rata between the separate creditors and partnership creditors

18. May be required additional contribution in case of imminent loss:

a. Capitalist partner c. Industrial partner

b. Limited Partner d. Expulsion of any partner

19. Which of the following may be a cause for involuntary dissolution?

a. Express will of any partner c. Termination of the term

b. Insolvency of any partner d. Expulsion of any partner

20. A substituted limited partner is:

a. A person admitted as a partner by the other partners

b. A buyer of right of a deceased partner
c. An assignee admitted to all the rights of a limited partner
d. All of the above

21. A partnership is dissolved on the death of a:

a. General partner c. General-limited partner

b. Industrial partner d. All of the above

22. A partnership

a. Is created by agreement of the partners

b. Has juridical personality separate and distinct from that of each of the partners
c. May be constituted in any form as a general rule
d. All of the above

23. The following persons are disqualified to form a universal partnership, except:

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 in consideration of the same

24. 3 of the following are rights of a partner, except:

a. To associate another person to his share c. To inspect and copy partnership books
b. To admit another partner d. To ask dissolution of the firm at the proper time

25. Which of the following is not an element of a partnership?

 3
a. Valid contract c. Intent to engage in lawful business
b. Contribution of money, property or industry to common fund d. None of the above
26. Sometimes termed dormant partner:

a. Limited partner c. Secret partner

b. Capitalist partner d. None of the above

27. In 3 of the following instances, the certificate of a limited partnership may be amended. Which is the
exception?

a. Change in the character of the business

b. There is a false or erroneous statement in the certificate
c. Death of a general partner
d. A person is substituted as a limited partner

28. A partner who contributes his work, labor or industry to the common fund of the partnership is called:

a. Industrial partner c. Capitalist-Industrial partner

b. Capitalist partner d. Ostensible partner

29. A partnership having for its object determinate things, their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation is called:

a. Partnership by estoppel c. Universal partnership of all present property

b. Particular partnership d. Universal partnership of profits

30. A partner in a limited partnership cannot contribute:

a. Cash c. Partly cash and partly property

b. Property and services d. None of the above

31. A, B and C are partners. Their contributions: A-P60,000; B-P40,000; C-services. They agreed to divide
profits and losses this way: A-35%; B-25% and C-40%. If there is a P10,000 profit, how should they share
the profit?

a. A-P6000; B-P4000; C-nothing c. A-P3500; B-P2500; C-P4000

b. A-P3000; B-P2000; C-P5000 d. A-P3500; B-P3500; C-P3000

32. On application by or for a partner the court shall decree a dissolution whenever:

a. A partner becomes in any other way incapable of performing his part of the partnership contract
b. A partner has been guilty of such conduct as it tends to affect prejudicially the carrying on of the business
c. A partner willfully or persistently commits a breach of the partnership agreement that it is not reasonably
practicable to carry on the business in partnership with him
d. All of the above

33. M is an industrial partner. Besides his services, he also contributed capital to the partnership. There is no
agreement as to profits or losses. The share of M in the profit is:

a. The remaining partners will determine his share in the profits

b. Combination of letter “c” and letter “d” below
c. Such share as may be just and equitable under the circumstances
d. Pro-rata to his contributions

34. Every contract of partnership having a capital of P3000 or more in money or property shall appear in a
public instrument which must be recorded in the SEC. Failure to comply with said requirements

a. Will not affect the liability of a partnership and the members thereof to 3 rd persons
b. Will render the partnership void
c. Will not give the partnership a legal personality
d. Will give the partnership a de facto existence

35. A partner whose connection with the partnership is open and public, such as by including his name in the
firm name of the partnership:

a. Nominal partner c. Secret partner

b. Ostensible partner d. Dormant partner

36. A partner who does not participate in the management of the affairs of the partnership and whose
connection with it is not made known to the public is called:

a. Ostensible partner c. Silent partner

b. Secret partner d. Dormant partner

37. 3 of the following listings are rights of a general partner in a limited partnership that are also enjoyed by a
limited partner. Which among them does a limited partner not enjoy?

a. To have partnership books kept at principal place of business & at a reasonable hour to inspect and copy them
b. To have on demand true and full info of all things affecting partnership affairs under reasonable and just
circumstances.
c. To have dissolution and winding up by decree of the court
 4
d. To have all the rights and be subject to all the restrictions and liabilities of a partner in a partnership without limited
partners.

38. A, B and C are partners in X Company. D owes the partnership P4500. A received from D a share of P1500
ahead of B and C, by giving D a receipt for his share only. D became insolvent subsequently.
a. A can be required to share the P1500 with B and C
b. A cannot be required to share the P1500 with B and C
c. B and C should exhaust first all remedies to collect from D
d. B & C can automatically deduct their share in the P1500 from A’s capital contribution in the partnership

39. A partner who has no voice or say in the management of partnership affairs is called:

a. Nominal partner c. Silent partner

b. Secret partner d. Dormant partner

40. A person who, not a partner, is made liable for partnership debts to 3 rd persons by reason of his acts or
omissions:

a. Ostensible partner c. Silent partner

b. Nominal partner d. Dormant partner

41. A partner who contributes money or property to partnership capital is called:

a. Industrial partner c. Capitalist-Industrial partner

b. Capitalist partner d. Nominal partner

42. A and B are partners, with A as managing partner. D owes A P10000 and the partnership P5000. Both debts
are due and demandable. D paid A P3000. A issued a receipt in the partnership’s name to D. How should
the P3000 be applied?

a. It should be applied to the indebtedness of D to A.

b. It should be applied to the indebtedness of D to the partnership
c. P2000 should be applied top the indebtedness of D to the partnership and P1000 to D’s indebtedness to A
d. P1000 should be applied top the indebtedness of D to the partnership and P2000 to D’s indebtedness to A

43. Which of the following is not a property right of a partner?

a. His rights in specific partnership property

b. His interest in the partnership
c. His right to participate in the management
d. To demand true and full information of all things affecting the partnership

44. Except when authorized by the other partners, one or more but less than all the partners have no authority
to:

a. Assign the partnership property in trust for creditors c. Compromise a partnership claim or liability
b. Dispose of the goodwill of the business d. All of the above

45. A limited partner shall not become liable as a general partner unless:

a. He takes part in the control of the business c. His surname appears in the partnership name
b. He contributes his services to the capital of the firm d. All of the above

46. A, B and C are partners. A contribute P10000; B, P5000; and C, his services. After payment of partnership
debts, P6000 remained as profits. IN the absence of a contrary stipulation, C’s share is:

a. That of B c. That of A
P2000 d. Nothing
47. A partner who contributes money or property as well as his work to partnership capital is called:

a. Industrial partner c. Capitalist-Industrial partner

b. Capitalist partner d. Managing partner

48. A partnership suffered losses in the 1st year of operations. X, a capitalist partner became insolvent. Can he
be obliged to sell his interest to the others partners on the ground of 1 st refusal/pre-emptive right?

a. Yes. X’s refusal to contribute additional capital reflects lack of interest to continue the business
b. No, there is actually no imminent loss of the business
c. Yes, provided X is paid the value of his interest
d. No, X’s refusal is justifiable

49. Which of the following is considered prima facie proof of partnership existence?
a. Payment of interest on a loan varies with the profits of the business
b. Receipts by a person of a share in the profits
c. Sharing of gross returns of the business
d. The parties are established as co-owners of a property.

50. A, B and C are partners in X Company. D represented himself as a partner to E, who believing D, lent
P10000 to X Company. A and B consented to such representation. Who is liable to E?
a. All partners including D
b. A, B and D are partners by estoppel and are pro-rata liable to E
c. Only D. He alone made the representation
 5
d. A, B and C. They benefited from the credit E extended.

GD LUCK!