MCQ FOR MIDTERM EXAM_Group 7 .pdf

University of San Carlos School of Business and Economics Department of Accountancy MCQ FOR MIDTERM EXAM In Partial Fulfillment of the Requirements for the Subject AC 2103 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS...

University of San Carlos School of Business and Economics Department of Accountancy MCQ FOR MIDTERM EXAM In Partial Fulfillment of the Requirements for the Subject AC 2103 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS Submitted by: GROUP #7 ANDALES, Danilyn ATAY, Jerusha Chris CARUMBA, Cindee Earl MAGNO, Ynah Francheska Marie RESTAURO, Francis Mae AC 2103 GROUP 10 M,W 12:00 PM - 01:30 PM Submitted to: MR. MARK ANTHONY MANTILLA ROSAL AC 2103 Professor Submitted on: September 28, 2024  MCQ FOR MIDTERM EXAM CHAPTER 1- General Provisions 1. Under Article 1767, which of the following is a key purpose of a partnership? A. To pool resources for personal savings. B. To divide profit among all employees equally. C. To engage in a business with the intention of dividing profits among partners. D. To establish a non-profit organization for social welfare. 2. According to Article 1772, when is it required for a partnership to be constituted in a public instrument? A. When the partnership capital is less than PHP 3,000. B. When the partnership has more than two partners. C. When the partnership capital is at least PHP 3,000 or involves immovable property. D. When the partnership is formed between relatives. 3. What is a partnership according to the General Provisions? A. An agreement between employees and employers B. A contract between two or more persons to carry on a business together C. A legal entity separate from its members D. An agreement to manage personal property 4. What is the purpose of the General Provisions chapter? A. To outline the specific tax obligations of the partners B. To provide definitions and establish the foundation for partnership law C. To govern the rights and liabilities of third parties D. To describe the process of dissolving a partnership 5. Which government body is responsible for the registration of partnerships in the Philippines? A. Department of Trade and Industry (DTI) B. Securities and Exchange Commission (SEC) C. Bureau of Internal Revenue (BIR) D. Civil Service Commission (CSC) 6. A and B orally agreed to form a partnership with a capital contribution of ₱10,000 each to run a restaurant for 10 years. What is the status of their agreement under the law? A. Valid as a partnership at will B. Invalid because it was not in writing C. Valid for less than 1 year D. The partnership is automatically a corporation 7. Rosa and Tina formed a partnership and contributed a piece of land worth ₱500,000. Who owns the land once it is contributed to the partnership? A. Rosa and Tina equally B. The partnership itself C. Rosa, because she contributed it D. The government 8. Statement 1: The law allows individuals to practice a profession as a corporate entity. Statement 2: A partnership contract, in its essence, is a contract of agency. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true 9. Statement 1: A partnership is a personal relation in which the element of delectus personae exists, involving as it does trust and confidence between the partners. Statement 2: Delectus personae is the right to select a particular person to occupy a specific position. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true 10. Statement 1: Transparency of the articles of partnership is not mandatory. Statement 2: The very reason for the existence of partnership is to obtain profits. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true  CHAPTER 2 - Obligations of Partners 1. Which of the following partnerships is considered non-existent and void from the beginning? A. A partnership formed without a written agreement. B. A partnership organized for the purpose of dividing profits unequally. C. A partnership that is formed for an unlawful purpose or contrary to public morals. D. A partnership that has fewer than three partners. 2. When is a partnership deemed to have commenced? A. On the date when the partners agree to the terms of the partnership verbally. B. On the date when the partnership contract is signed by all partners. C. On the date when the partnership is registered with the Securities and Exchange Commission (SEC). D. On the date when the partners start conducting business operations. 3. How are profits typically shared among partners in a partnership? A. According to the capital contribution of each partner B. Equally among all partners, unless agreed otherwise C. Based on seniority within the partnership D. Only by the general partner 4. What is the obligation of partners towards the partnership's liabilities? A. Each partner is personally liable for all debts and obligations of the partnership B. Partners have no liability for the partnership’s debts C. Only the managing partner is liable for the partnership's debts D. Partners are liable only to the extent of their capital contribution 5. Partner R, a silent partner, signs a contract with a supplier for partnership supplies. Is the partnership bound by this contract? A. Yes, silent partners can bind the partnership. B. Yes, if the other partners agree after the fact. C. No, unless the contract is ratified by the managing partner. D. No, silent partners do not have authority to bind the partnership. 6. Partner M discovers a profitable investment opportunity but does not inform the other partners. What obligation has Partner M violated? A. The duty to act in good faith. B. The duty to manage partnership affairs. C. The duty of loyalty. D. The duty to contribute capital. 7. Statement 1: Co-ownership has no juridical personality and is distinct from that of each partner contrary to Partnership. Statement 2: Partnership is generally created by law. It may exist even without a contract. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true 8. 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: Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true 9. A partner who contributed his industry, labor, or services to the partnership. A. Capitalist Partner B. Romantic Partner C. Industrialist Partner D. Industrial Partner 10. If a partner wants to withdraw from the partnership, they are required to A. Provide notice to the other partners in advance B. Leave without notifying anyone C. Take their share of profits without consultation D. Sell their partnership interest to anyone without approval  CHAPTER 3 - Dissolution and Liquidation 1. Which of the following best describes the contribution of partners in a partnership? A. Partners are only required to contribute money to the partnership. B. Contributions can consist of money, property, or industry (work or services). C. Contributions are limited to property or goods only. D. Only the managing partner is required to make a contribution. 2. In a partnership, when is a partner entitled to reimbursement for expenses incurred on behalf of the partnership? A. Only when the partner gets approval from all other partners before incurring the expense. B. When the expenses are necessary and made in good faith for the interest of the partnership. C. Only if the expenses exceed the partnership’s initial capital. D. When the expenses are related to the partner’s personal business. 3. Which of the following is a cause for the dissolution of a partnership? A. Death or incapacity of any partner B. Success of the partnership business C. A partner's withdrawal of profits D. All partners reaching a specific age 4. What is the first step in the liquidation process after the dissolution of a partnership? A. Distribution of remaining profits to the partners B. Settling all outstanding debts and obligations C. Selling off partnership assets D. Notifying creditors of the dissolution 5. When can a partnership continue operating after dissolution? (CARUMBA) - 8 A. If the remaining partners agree to continue the business. B. If a new partner joins immediately after dissolution. C. A partnership cannot continue after dissolution under any circumstances. D. Only if a court orders the continuation of the business. 6. If a partnership agreement is silent on the process of dissolution and liquidation, what statutory provisions govern the dissolution and liquidation of the partnership? A. The Civil Code provisions on partnerships. B. The Uniform Partnership Act. C. The partnership's internal rules. D. The laws of the state where the partnership was formed. 7. In a partnership, if a partner passes away and there is no provision in the partnership agreement regarding this situation, what happens to the deceased partner's interest? A. The partnership is automatically dissolved. B. The interest passes to the deceased partner’s heirs. C. The remaining partners can buy out the deceased partner's share at market value. D. The partnership can continue, but the deceased partner's heirs must agree to terms. 8. Statement 1: Dissolution of a partnership is the extinguishment of the contract. Statement 2: If the partnership continues after a partner's death, the estate of the deceased partner is only liable for obligations incurred up to the extent of their capital or interest left in the business. A. Both statements are true B. Both statements are false C. Statement 1 is true, Statement 2 is false D. Statement 1 is false, Statement 2 is true 9. It is the process of settling the business or partnership affairs after dissolution. A. Termination B. Winding up C. Dissolution D. Closure 10. Among the choices, who is considered the most vulnerable when using the cash priority program of planning the distribution of cash to partners in the event of partnership liquidation. A. Partner with the lowest loss absorption potential B. Partner with the least capital balance C. Partner with the largest loss-sharing ratio D. partner who is personally insolvent  CHAPTER 4 - Limited Partnership 1. What is a key difference between a general partner and a limited partner? A. A general partner manages the business while a limited partner provides capital but does not manage B. A general partner is liable only for their capital contribution, while a limited partner is fully liable C. A general partner has limited liability, while a limited partner has unlimited liability D. Both partners have equal rights and liabilities 2. Which of the following is true about the liability of a limited partner? A. A limited partner is liable for the partnership's debts beyond their investment B. A limited partner’s liability is limited to their capital contribution C. A limited partner is not liable for any of the partnership’s debts D. A limited partner's liability is the same as a general partner’s 3. Which of the following can cause a limited partner to lose their limited liability status? A. Acting as a manager in the partnership’s operations. B. Contributing additional capital to the partnership. C. Failing to attend partnership meetings. D. Distributing personal profits from the partnership. 4. What legal requirement must be met for a partnership to be classified as a limited partnership? A. The partnership agreement must be notarized. B. The limited partner must file a certificate of limited partnership with the SEC. C. The partnership must register with the Department of Trade and Industry (DTI). D. The limited partner must be a foreign investor. 5. In a limited partnership, the original partnership agreement specified a profit-sharing ratio of 70% for general partners and 30% for limited partners. If the general partners decide to change this ratio to 50% each without consulting the limited partners, what is the legal standing of this modification? A. The modification is valid as long as general partners agree B. The modification is invalid unless limited partners consent C. The modification can be enacted after notifying limited partners D. The modification can be made if the partnership has been operating for five years 6. During a business trip, a limited partner, Beth, actively participates in a transaction that results in significant losses for the partnership. If the transaction was unauthorized and against the partnership's interests, what is Beth’s liability? A. She has no liability due to her limited partner status B. She is liable only for her investment C. She becomes jointly liable for the losses incurred D. Her liability is capped at the amount of the transaction 7. In a limited partnership, who is responsible for managing the business? A. Limited partners B. General partners C. Shareholders D. Employees 8. Listed below are the characteristics of limited partnership, except: A. A limited partnership is formed by compliance of the statutory requirements B. One of more general partner controls the business C. The limited partners may ask for the return of their capital contribution under the conditions prescribed by law D. The retirement, death, insanity or insolvency of a limited partner dissolves the partnership 9. In a limited partnership composed of X, Y, Z, the contributions are as follows: X- industry, Y-cash and industry, and Z- property. Who among the partners are sure to be the general partner? A. X B. Y C. Z D. X and Y 10. In a limited partnership composed of X, Y, Z, the contributions are as follows: X- industry, Y-cash and industry, and Z- property. Is it possible that Y is both a limited partner and general partner in the same partnership? A. No. A partner can only be either limited or general, but not both in any partnership. B. Yes. A partner may become both, it depends only on the mediums he has contributed. C. Yes. A partner may be a general partner and a limited partner in the same partnership at the same time, provided that this fact shall be stated in the certificate provided. D. No. A partner can only be limited or general not in the same partnership business. ANSWER KEY: CHAPTER 1 - General Provisions 1. C. To engage in a business with the intention of dividing profits among partners. 2. C. When the partnership capital is at least PHP3,000 or involves immovable property. 3. B. A contract between two or more persons to carry on a business together. 4. B. To provide definitions and establish the foundation for partnership law. 5. B. Securities and Exchange Commission (SEC) 6. B. Invalid because it was not in writing. 7. B. The partnership itself. 8. D. Statement 1 is false, Statement 2 is true 9. A. Both statements are true 10. D. Statement 1 is false, Statement 2 is true CHAPTER 2 - Obligations of Partners 1. C. A partnership that is formed for an unlawful purpose or contrary to public morals. 2. D. On the date when the partners start conducting business operations. 3. B. Equally among all partners, unless agreed otherwise. 4. A. Each partner is personally liable for all debts and obligations of the partnership. 5. D. No, silent partners do not have authority to bind the partnership. 6. C. The duty of loyalty. 7. C. Statement 1 is true, Statement 2 is false 8. A. Both statements are true 9. D. Industrial Partner 10. A. Provide notice to the other partners in advance. CHAPTER 3 - Dissolution and Liquidation 1. B. Contributions can consist of money, property, or industry (work or services). 2. B. When the expenses are necessary and made in good faith for the interest of the partnership. 3. A. Death or incapacity of any partner 4. B. Settling all outstanding debts and obligations. 5. A. If the remaining partners agree to continue the business. 6. A. The Civil Code provisions on partnerships. 7. B. The interest passes to the deceased partner’s heirs. 8. D. Statement 1 is false, Statement 2 is true 9. B. Winding up 10. A. Partner with the lowest loss absorption potential. CHAPTER 4 - Limited Partnership 1. A. A general partner manages the business while a limited partner provides capital but does not manage 2. B. A limited partner’s liability is limited to their capital contribution 3. A. Acting as a manager in the partnership’s operations 4. B.The limited partner must file a certificate of limited partnership with the SEC 5. B. The modification is invalid unless limited partners consent 6. C. She becomes jointly liable for the losses incurred 7. B. General partners 8. D. The retirement, death, insanity or insolvency of a limited partner dissolves the partnership 9. A. X 10. C. Yes. A partner may be a general partner and a limited partner in the same partnership at the same time, provided that this fact shall be stated in the certificate provided.