ASSOCIATION OF TAXATION AND LAW STUDENTS

BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY

UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

1. 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 P60,000. 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

2. A, B and C are partners in a trucking and freight business. B and C without the knowledge of A approached
X and offered to sell to X all the trucks of the partnership at a price very much higher than their 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 A for 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.

3. 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

4. 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, P12,000; B, P6,000; C, None
b. A, P6,000; B, P6,000; C, P6,000
c. A, P9,000; B, P9,000; C, None
d. A, P8,000; B, P4,000; C, P6,000

5. Three (3) of the following are rights of a partners. 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 book
d. Right to ask dissolution of the firm at the proper time

6. 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 are organization of an aggregate of individuals
d. The individuals composing both have little voice in the conduct of the business.

Page | 1
 ASSOCIATION OF TAXATION AND LAW STUDENTS
BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

7. 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

8. In the ABC Partnership, A and B contributed P20,000 each and C , his services. After paying all the creditors
of the partnership, only P18,000 in cash remains. In the absence of terms to the contrary, the share of C is
equal to:
a. P6,000
b. The share of A
c. The share of B
d. Nothing

9. 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

10. 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

11. A partner in a partnership who is not really a partner, not being a party to the partnership agreement, but 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

12. 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

Page | 2
 ASSOCIATION OF TAXATION AND LAW STUDENTS
BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

c. A, B and C and C can recover for reimbursement from A and B

d. Answer not given

13. 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 case:
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 P12,000, all the partners shall be liable jointly or pro-rata, out of their separate property.
d. Answer not given.

14. 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 B and C the P5,000
d. B and C automatically sue D to collect the P10,000

15. 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

16. A, B and C are partners in D-3 Partnership. On April 29,2010, partner C died. Not knowing that C died, on
May 1, 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 P15,000 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

17. 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; Partner as creditors; Partners profit
d. Outside creditors; Partner capital; Partners profit; Partners as creditors

Page | 3
 ASSOCIATION OF TAXATION AND LAW STUDENTS
BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

18. 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. R and will determine T’s share I, in the profits
b. T’s share is P7,000
c. Pro-rata to his contributed capital
d. Nothing, because he is an industrial partner

19. 50. W, X, 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 exceed the total
net assets by P18,000. Who and by how much will the partners be liable for the payment of the P18,000?
W X Y Z
a. P9,000 P5,400 P3,600 0
b. P4,500 P4,500 P4,500 P4,500
c. P6,000 P6,000 P6,000 P6,000
d. P4,500 P2,700 P1,800 P9,000

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

a. Formal c. Gratuitous
b. Innominate d. Preparatory

21. One who takes active part in the business, but is not known to be a partner by outside parties is:
a. Silent partner c. Nominal partner
b. Dormant partner d. Secret partner

22. 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 of the new partner should not be satisfied out
of the partnership property.

23. I. The arrival of the term of a partnership with a fixed term or period shall not dissolve the partnership if the
partners continue with the business of the partnership but such partnership may be terminated anytime
dependent on the will of the continuing partners.
II. The general rule is that the loss of the specific thing contributed to the partnership when only the use of
the thing is contributed by the partner and such thing after its transfer to the partnership which used the same
or sometime was subsequently lost, the partnership is not dissolved.
a. True; False c. False; False
b. True; True d. False; True

Page | 4
 ASSOCIATION OF TAXATION AND LAW STUDENTS
BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

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

a. General partner c. Limited partner
b. Industrial partner d. Managing partner

25. A limited partner who takes active part in the management of the firm becomes:
a. A managing partner
b. Liable as a general partner
c. A general partner
d. A general partner and a limited partner at the same time

26. 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 limited 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.

27. A is the managing partner of A and Company. X is indebted to A for P20,000 and to the partnership for
P60,000. When both debts mature, X pays A P20,000 and the latter issues a receipt for his personal credit.
The payment for P20,000 shall be applied:
a. ¼ in favor of A and ¾ in favor of the partnership
b. To the whole debt owing to A
c. ½ in favor of A and ½ in favor of the partnership
d. To the debt owing to the partnership

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

a. There must be a contribution of money, property, or 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.

29. A and B are partners. On June 15, 2009 when the total obligation of the partnership totaled P80,000. C
was admitted as new partner. At the time C’s admission, the partnership creditors were M for P50,000 and N
for P30,000. After June 15, the partnership borrowed from O P20,000 and P40,000 from P. On December 15,
2009, the partnership became insolvent leaving an obligation totaling P140,000 and partnership assets
amounting to P30,000. The creditors are going after the separate properties of the partners to satisfy their
remaining claims. How are the creditors’ claims satisfied?
A. Answer 1 - M and N can go after the separate properties of A and B but C’s separates properties
are not answerable to their claims.
B. Answer 2 – O and P can go after the separate properties of A, B and C.
a. Both answers are wrong
b. Answer 2 is wrong but answer 1 is correct
c. Both answers are correct
d. Answer 2 is correct but answer 1 is wrong

Page | 5
 ASSOCIATION OF TAXATION AND LAW STUDENTS
BRILLIANCE, EXCELLENCE AND SUPERIORITY and HIYAS NG SILANGAN HONOR'S SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN
PARTNERSHIP AND CORPORATION – PRELIMS TOPICS REVIEWER

30. A and B are capitalist partners with C as industrial partner. A and B contributed P20,000 each to the capital
of the partnership. A contractual liability of P50,000 was incurred by the partnership in favor of X. The assets
of the partnership had been exhausted still leaving an unpaid liability of P10,000. X can recover the amount
from:
a. A, B and C and C can recover by way of reimbursement from A and B unless stipulated otherwise.
b. A and B only
c. C only
d. A, B and C and C has no right for reimbursement from A and B unless expressly stipulated.

31. 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 partners in respect to profits
c. Those owing to partners in respect to capital
d. Those owing to partners other than for capital and profits

32. I. The contribution of a limited partner may be cash, property or service

II. A limited partner who takes part in the management of the business of the partnership is not a general
partner but he shall be liable as a general partner.
a. True; True c. False; False
b. True; False d. False; True

33. I. A person may be a general and a limited partner in the same partnership at the same time.
II. A person admitted as a partner into an existing partnership is not liable for partnership obligations existing
before his admission
a. True; True c. False; False
b. True; False d. False; True

34. I. A partner cannot assign his interest in the partnership to a third person without the consent of the other
partners.
II. A partner’s interest in the partnership is his personal property.
a. True; True c. False; False
b. True; False d. False; True

35. I. The creditor of each partner shall be preferred to those of the partnership as regards the partner’s separate
property.
II. An industrial partner is exempted from losses but not from partnership liabilities
a. True; True c. False; False
b. True; False d. False; True

Page | 6