IRS CPA REVIEW

Iloilo City and Leganes, Iloilo

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

LAW ON PARTNERSHIP

GENERAL PRINCIPLES

MULTIPLE CHOICE QUESTIONS

1. Statement 1: A partnership may be constituted in public or private

instrument.
Statement 2: The receipt by a person of a share of the profits of
business is a conclusive evidence that he is a partner in the business.

a. Only statement 1 is correct.

b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.

2. Statement 1: A partnership has a juridical personality separate and

distinct from that of each of the partners.
Statement 2: A partnership begins from the time the partnership
contract is registered with the SEC.

a. Only statement 1 is correct.

b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.

3. Statement 1: A partnership must have a lawful object or purpose, and

must be established for the common benefit or interest of the partners.
Statement 2: A partnership may be established for charity.

a. Only statement 1 is correct.

b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.

4. Statement 1: When an unlawful partnership is dissolved by a judicial

decree, the profits shall be confiscated in favor of the state.
Statement 2: Articles of Universal Partnership entered into without
specification of its nature is presumed to constitute only a universal
partnership of all profits.

a. Only statement 1 is correct.

b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.

5. Statement 1: One of the partners in a proposed partnership is a multi-

millionaire. The stipulation in the contract of partnership that this
partner shall be exempted from sharing in the profits of the partnership
is valid.
Statement 2: Two or more persons may form a partnership for the
exercise of a profession.

a. Only statement 1 is correct.

b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.

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6. Statement 1: Unless there is a stipulation to the contrary, the partners
shall contribute equal shares to the capital of the partnership.
Statement 2: The receipt by a person of a share of the profits of a
business does not of itself establish a partnership.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.
7. Statement 1: Articles of Universal Partnership, executed without
specification of its nature, constitutes a universal partnership of all
present property.
Statement 2: Persons who are prohibited from giving each other any
donation or advantage cannot enter into universal partnership.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are wrong.
8. Which of the following is not an element of a partnership?
a. There must be a written contract.
b. There must be a mutual contribution of money, property, or
industry to a common fund.
c. There must be an intent to engage in lawful business, trade or
profession.
d. The purpose must be to secure profits and to divide the same
among the partners.

9. Every contract of partnership having a capital of P3,000 or more in

money or property shall appear in a public instrument which must be
recorded in the Securities and Exchange Commission. Failure to
comply with said requirements

a. Will not affect the liability of a partnership and the members

thereof to third 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.

10. Which of the following is considered prima facie evidence of the

existence of a partnership?

a. Where payment of interest on a loan varies with the profits of the

business.
b. The receipts by a person of a share of the profits.
c. The sharing of gross returns of a business.
d. Where the parties are established as co-owners of a property.

11. A partnership

a. Is created by agreement of the partners

b. Has a juridical personality separate and distinct from that of each
of the partners.
c. May be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a
public instrument shall be necessary.
d. All of the above

12. Associations and societies, whose articles are kept secret among the
members, and wherein any one of the members may contract in his
own name with third persons, shall have no juridical personality, and
shall be governed by provisions of law relating to:

a. Partnership
b. Corporation
c. Co-ownership
d. Joint accounts

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

a. Limited partner
b. General partner
c. Both limited and general partners
d. None of them

14. Sometimes termed dormant partner:

a. Limited partner
b. Capitalist partner
c. Secret partner
d. None of the above

15. The receipt by a person of a share of the profits of a business is prima

facie evidence that he is as 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

16. Which of the following contracts of partnership will not affect its validity
even if not in a public instrument?

a. Limited partnership
b. Partnership where immovables are contributed
c. Partnership having a capital of P3,000.00 or more
d. None of the above

17. 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

b. Universal partnership of profits
c. Particular partnership
d. None of the above

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

a. There must be a valid contract.

b. There must be a mutual contribution of money, property or
industry to a common fund.
c. There must be an intent to engage in lawful business, trade or
profession.
d. None of the above

19. A particular partnership has for its object any of the following,
EXCEPT:

a. Determinate things
b. Exercise of profession
c. Specific undertaking
d. None of the above

20. A partnership whereby the partners contribute to a common fund all

the property actually belonging to them at the time of the constitution
of the partnership, with the intention of dividing the same among
themselves, as well as the profits which they may acquire therewith
is called:

a. Universal partnership of all present property

b. Universal partnership of profits
c. Particular partnership
d. None of the above

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21. A partnership without a definite period of existence and which can be
dissolved at any time by any of the partners is called:

a. Universal partnership of all present property

b. Universal partnership of profits
c. Particular partnership
d. None of the above

22. A partner whose liability for partnership debts is limited to his capital
contribution is called:

a. General partner
b. Limited partner
c. Secret partner
d. None of the above

23. 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
b. General-limited partner
c. Dormant partner
d. None of the above

24. Bears the risk of things contributed to the partnership:

a. Contributing partner
b. Limited partner
c. Partner contributing usufructuary rights
d. All of the above

25. Refers to persons who represent themselves, or consent to another or

others to represent them to anyone that they are partners:

a. General partnership
b. Limited partnership
c. Partnership by estoppel
d. None of these

26. A partnership where all the partners are general partners who as
such are liable for partnership debts to the extent of their separate
property after all the partnership assets have been exhausted is
called:

a. Limited partnership
b. General partnership
c. Particular partnership
d. None of these

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

a. Nominal partner
b. Ostensible partner
c. Dormant partner
d. None of these

28. A partner who has no voice nor say in the management of the affairs
of the partnership is called:

a. Secret partner
b. Silent partner
c. Dormant partner
d. None of these

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29. 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. Secret partner
b. Silent partner
c. Dormant partner
d. None of these

30. A person who, although not actually a partner, is made liable for the
debts of the partnership to third person by reason of his acts or
omissions is called:

a. Ostensible partner
b. Nominal partner
c. Dormant partner
d. None of these

31. A partner who contributes money or property to the capital of the

partnership is called:

a. Industrial partner
b. Capitalist partner
c. Capitalist-industrial partner
d. None of these

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

a. Industrial partner
b. Capitalist partner
c. Capitalist-industrial partner
d. None of these

33. A partner who contributes money or property as well as his work or

industry to the capital of the partnership is called:

a. Industrial partner
b. Capitalist partner
c. Managing partner
d. None of these

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

a. Partnership by estoppel
b. Particular partnership
c. Universal partnership of all present property
d. None of the above

35. 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 in consideration of the same.

End