Unit 1 Prepare - Business Partnerships Quiz

Unit 1 Prepare - Test Your Knowledge

• Question 1: Jake and Michael import motorcycles from Europe to undercut UK dealers. Michael speaks French, orders bikes, and receives a commission. Jake and Michael are not in partnership.

• Question 2: Jamie and Malcolm are partners. Jamie contributed 25%, Malcolm 75% of capital. Jamie works full-time, Malcolm provides consultancy. Profit sharing is not detailed in the agreement; therefore, the default is 50/50.

• Question 3: Muriel, Molly, and Marilyn share profits equally. Partners do not have an express agreement on leaving/competing or salary, so there is no restriction from leaving the business or expelling a partner.

• Question 4: John, Andrew, and Robert are partners with no written agreement. John's bankruptcy does not automatically dissolve the partnership. Andrew and Robert can continue the business.

• Question 5: Adam, Rebecca, and Kamal are partners with capital contributions of £10,000 (Adam and Rebecca), and £20,000 (Kamal). They share profits in proportion to their contributions. Kamal should receive £8,000 of the £24,000 realisable value.

Unit 1 Consolidate - Test Your Knowledge

• Question 1: Liam and Daniel are partners without a written agreement. Daniel has been involved as a sleeping partner in Car Parts (Garages) Co., potentially creating a conflict of interest. Liam can claim a share of profits from Car Parts, which Daniel may have received.

• Question 2: Nicola helps daughters (Antonia and Chelsea) with their beauty business. The business has an agreement and Nicola is not a partner. If Nicola represented herself as a partner and suppliers acted upon this without confirming whether or not she was partner, Nicola could be liable.

• Question 3: Oliver, Henry, and Michelle are partners. Henry resigns from the partnership; however, liability remains for any present and future partnership obligations. Oliver, Michelle, and Isobel are liable for any further breach.

• Question 4: Helen, Judy, and Len run a bakery as partners with oral profit-sharing agreement (1:1:2, respectively). The sharing of profits is correct if the profit sharing ratio 1(Helen):1(Judy):2(Len). Each partner is liable without limit for firm debts, and one partner can't force dissolution without agreement.

• Question 5: Therese, Tim, and Scarlet are partners. Therese leaves the partnership. She may still be liable for outstanding debts from Bramhope Ltd, to the business, if it was incurred before her leaving.