Pamantasan ng Cabuyao

Katapatan Subd., Banay Banay, Cabuyao, Laguna

PRELIM EXAM- THEORIES PART 2

MULTIPLE CHOICE. Indicate your answers by writing the letter representing the answer of your choice.

1. The liability of the partners, including industrial partners for partnership contracts entered into in its
name and for its account, when all partnership assets have been exhausted is
a. Pro- rata
b. Joint
c. Solidary
d. Voluntary
2. X Co., a partnership is composed of A (capitalist partner), B (capitalist partner) and C (industrial
partner). If you were partner A, who between B and C would you have insurable interest on, such that
you may then insure him?
a. No one, as there is merely a partnership contract among A, B and C
b. Both B and C, as they are your partners
c. Only C, as he is an industrial partner
d. Only B as he is a capitalist partner
3. A limited partnership has A, as general partner, B as limited partner and C, as industrial partner
contributing Php 100,000, Php 50,000 and services respectively. The partnership failed and after
disposing all its assets to pay partnership debts, there still remains a note payable in the sum of Php
30,000. Against whom can the creditor demand payment?
a. A- Php 30,000; B- Php 0; C- Php 0
b. A- Php 15,000; B- Php 0; C- Php 15,000
c. A- Php 15,000; B- Php 7,500; C- Php 7,500
d. A- Php 10,000; B- Php 10,000; C- Php 10,000
4. X, Y and Z form a Y partnership to engage in import- export business. The partners agreed that the
profit will be divided on the following ratio: X- 20%, Y- 30%, Z- 50%, but no agreement as to losses.
After one year of operation, there was a loss of Php 10,000. How will you apportion this loss if the
capital contributions are as follows: X- Php 20,000; Y- Php 15,000; Z- Php 5,000.
a. According to their capital contribution: Php 5,000; Y- Php 3,750; Z- Php 1,250
b. Equally among X, Y and Z
c. X- Php 2,000; Y- Php 3,000; Z- Php 5,000
d. A third party may be called to make the distribution
5. M, T and E decided to form a universal partnership of all present property. The contract of partnership
was executed on October 10, 2010 but they commenced business on October 18, 2011. One of the
following is not correct
a. If the partnership is for 15 years, but one of the partners withdraws form the partnership on the 12 th
year, the firm is dissolved.
b. The partnership began its existence on October 10, 2010.
c. If after the expiration of its term, the partners continue to transact business, the partnership is
converted to a partnership at will
d. In the absence of any partnership agreement specifically covering the division of losses among the
partners, they will be deemed to share the losses in accordance with their capital contributions.
6. Partners A, B and C met a tragic accident. A and B instantly died on the spot, while C was brought to
the hospital but died a few hours later. Who may wind- up partnership affairs?
a. Legal representative of A
b. Legal representative of B
c. Legal representative of C
d. The court should appoint a representative who will wind- up the affairs
7. A, B and C agreed to form Y Partnership. It was orally agreed that A would contribute Php 20,000, B
Php 15,000 and C Php 5,000. It was also orally agreed that in the event the venture proved to be a
financial loss, all losses above the amounts of capital contributed would be assumed by A. There were
no other express agreements. Under theses circumstances, which of the following is correct?
a. Profits are to be divided in accordance with the wish of A being the major contributor
b. Profits are to be divided equally
c. The partnership is a nullity because the agreement is not contained in a signed writing
d. The partnership is valid notwithstanding failure to put the agreement in a public instrument
8. Which of the following is true with respect to a limited partner?
a. Must not own limited- partnership interests in other competing limited partnership
b. Is automatically an agent for the partnership with apparent authority to bind the limited partnership
in contract
c. Has no liability to creditors even if he takes part in the control of the business as long as he is held
out as being a limited partner
d. Should not contribute industry
9. A, B and C formed a universal partnership of profits. The partners contributed the following:
A- 20 Sewing Machine B- 14 Furniture and Fixtures C- 4 Storey Building
 The parties agreed that only the use and fruits of the objects contributed shall pertain to the partnership.
Which of the following statements is true?
a. The partnership upon delivery shall be the owner of the objects contributed.
b. Upon dissolution, the objects shall be converted into cash and the proceeds shall be divided equally
among the partners including the fruits.
c. During the term of the partnership, the contributing partner remains to be the naked owner of the
object contributed but upon the dissolution all objects contributed are to be converted into cash and
proceeds shall be divided equally among the three partners.
d. During the term of the partnership, the loss of the objects contributed shall be borne by the partners
concerned.
10. If the partner assigns his interest in the partnership to his personal creditor or to a third person for value,
the assignee acquires the right to
a. Demand an accounting of partnership affairs
b. Inspect the books and records of the partnership
c. Receive the partner- assignor’s share of the profits
d. Interfere in the management of the partnership
11. The partners agreed that only the use and fruits of the objects contributed shall pertain to the partnership
(Universal partnership of profits). Which of the following statements is true?
a. The partnership upon the delivery shall be the owner of the objects contributed.
b. Upon dissolution, the objects shall be converted into cash and the proceeds shall be divided equally
among the partners including the fruits.
c. During the term of the partnership, the contributing partner remains to be the naked owner of the
object contributed thereto but upon dissolution all objects contributed are to be converted into cash
and proceeds shall be divided equally among the partners.
d. During the term of the partnership, the loss of the objects contributed due to fortuitous event shall
be borne by the partner concerned except if the object contributed is fungible.
12. Which of the following is a characteristic of partnership as a contract?
a. Preparatory
b. Formal
c. Innominate
d. Gratuitous
13. S and G established a partnership contributing Php 200,000 each. F, a classmate allowed his name to be
included in the firm name of the partnership. The partnership was insolvent and after exhausting all the
remaining assets, there remains a liability to third persons amounting to Php 30,000. The creditors can
compel
a. Either S and G or F to pay the Php 30,000 liability
b. Either S or G to pay the Php 30,000 liability
c. S and G to pay Php 15,000 each
d. S, G and F to pay Php 10,000 each
14. Using the preceding number, if the partnership is solvent and there is a profit of Php 30,000, without
any stipulation as regards profit sharing, the participation of the partners on the profit will be
a. Just and equitable share for F, and the remainder, equally between S and G
b. Equally, Php 10,000 each among S, G and F
c. Equally Php 15,000 each between S and G
d. The court will intervene
15. A limited partner who takes active participation in the management of the partnership shall become
a. A managing partner
b. A general partner
c. Liable a general partner
d. An ostensible partner
16. Three of the following are rights of a partner, which one is not? Right to
a. Associate another person to his share
b. Admit another partner
c. Inspect and copy partnership book
d. Ask dissolution of the firm at the proper time
17. A partnership which comprises all that the partners may acquire by their work or industry during the
existence of the partnership is
a. Universal partnership of present property
b. Universal partnership of profits
c. Particular partnership
d. General partnership
18. The following are the effects of unlawful partnership, except:
a. The profits shall be confiscated in favor of the government
b. The instruments or tools and proceeds of the crime shall be forfeited in favor of the government
c. The contribution of the partners shall be confiscated in favor of the government
d. The contract is void ab initio and the partnership never existed in the eyes of the law
19. Which of the following is generally not a characteristic of a contract of partnership?
a. Bilateral or Multilateral
b. Formal or Solemn
c. Preparatory
d. Onerous
20. What form of partnership can exercise a profession?
 a. Business partnership
b. Universal partnership of all present property
c. Universal partnership of all profits
d. Particular partnership
21. In general partnership, how shall partnership profits be distributed to the partners?
a. In accordance to partnership profit agreement
b. In accordance to partnership loss agreement
c. In accordance to capital contribution ratio
d. Equally
22. In general partnership, how shall partnership profits be distributed to industrial partners if there is no
partnership profit agreement?
a. The industrial partner shall receive just and equitable share before distribution to capitalist partners.
b. In accordance to partnership loss agreement
c. In accordance to capital contribution ratio
d. The industrial partner shall receive a share equivalent to the share of the least capitalist partner
23. In a general partnership, how shall the remaining partnership profits after distribution to industrial
partner of his just and equitable share be distributed to capitalist partners if there is no partnership profit
agreement?
a. In accordance to partnership loss agreement
b. In accordance to capital contribution ratio
c. Equally
d. In accordance to withdrawal ratio
24. In general partnership, how shall partnership loss be distributed to the partners?
a. In accordance to partnership profit agreement
b. In accordance to partnership loss agreement
c. In accordance to capital contribution ratio
d. Equally
25. In a general partnership, how shall partnership losses be distributed to industrial partner if there is no
partnership loss agreement?
a. The industrial partner shall receive just and equitable share before distribution to capitalist partners.
b. In accordance to partnership profit agreement
c. The industrial partner shall not share in the losses
d. The industrial partner shall receive a share equivalent to the share of the least capital partner
26. In a general partnership, how shall partnership losses be distributed to capitalist partners if there is no
partnership loss agreement?
a. In accordance to partnership profit agreement
b. In accordance to capital contribution ratio
c. In accordance to age ratio
d. Equally
27. In a general partnership, how shall partnership losses be distributed to capitalist partners if there is no
partnership profit/ loss agreement?
a. In accordance to partnership profit agreement
b. In accordance to capital contribution ratio
c. The industrial partner shall receive equivalent to the share of the least capitalist partner
d. Equally
28. Which of the following may not be contributed by a pure limited partner?
a. Cash
b. Personal property
c. Real property
d. Labor or services
29. Which of the following partners is not entitled to inspect the partnership’s books?
a. Nominal partner
b. Industrial partner
c. Limited partner
d. Any of the above
30. How shall a pure industrial partner be classified?
a. General partner
b. General- limited partner
c. Limited partner
d. Any of the above
31. A limited partner’s interest in a limited partnership is
a. Assignable
b. Not assignable
c. Waivable
d. Now waivable
32. A, B, C, D and E are partners in ABC limited partnership. Both C and D are limited partners while E is
an industrial partner. D is appointed as managing partner. The partnership became insolvent. Unpaid
partnership liabilities amounted to Php 6,000,000 after exhaustion of partnership’s assets. How much
may the unpaid partnership creditor collect from the partners?
a. Php 1,200,000 each from A, B, C, D, and E
b. Php 3,000,000 each from A and B
c. Php 2,000,000 from A, B and E
 d. Php 1,250,000 each from A and B
33. A, B, C, D are partners in AB general partnership. A, B and D are capitalist partners while C is an
industrial partner. D is exempted by agreement from liability to third parties. The partnership became
insolvent. Unpaid partnership liabilities amounted to Php 6,000,000 after exhaustion of partnership’s
assets. How much may the unpaid partnership creditor collect from the partners?
a. Php 1,500,000 each from A, B, C and D.
b. Php 3,000,000 each from A and B.
c. Php 2,000,000 each from A, B and D.
d. Php 2,000,000 each from A, B and D.
34. Using the same data in the preceding number, how much is ultimately shouldered by the partners from
the said unpaid liabilities of the partnership?
a. Php 1,500,000 each from A, B, C and D.
b. Php 3,000,000 each from A and B.
c. Php 2,000,000 each from A, B and D.
d. Php 2,000,000 each from A, B and D.
35. A, B and C are partners in AB limited partnership. A and B are general partners while C is a limited
partner. The partnership became insolvent. Unpaid partnership liabilities amounted to Php 6,000,000
after exhaustion of partnership’s assets. How much may the unpaid creditors collect from the partners?
a. Php 2,000,000 each from A, B and C.
b. Php 3,000,000 each from A and B.
c. Php 6,000,000 each from A or B or C.
d. Php 6,000,000 each from A or B.
36. A, B and C are partners in ABC general partnership. While driving to a partnership’s client, A, the
managing partner, accidentally bumped a pedestrian which resulted to civil damages amounting to Php
3,000,000. The partnership became insolvent. The civil liability for such quasi- delict remain unpaid.
How much may the pedestrian collect from the partners?
a. Php 2,000,000 each from A, B and C.
b. Php 3,000,000 each from A and B.
c. Php 6,000,000 each from A or B or C subject to reimbursement from A.
d. Php 6,000,000 each from A or B.
37. When a new partner is admitted,
a. He is liable to obligations incurred before his admission up to the extent of his separate assets when
there is a stipulation to that effect and he is liable up to the extent of his separate assets to
obligations incurred after his admission even without stipulation.
b. He is liable to obligations incurred before and after his admission up to the extent of his separate
assets only when there is stipulation to that effect.
c. He is liable to obligations incurred before his admission up to the extent of his separate assets even
without stipulation to that effect and he is liable up to the extent of his separate assets to obligations
incurred after his admission when there is stipulation to that effect.
d. He is liable to obligations incurred before and after his admission up to the extent of his separate
assets even without stipulation.
38. A, B, C, D and E are general partners in ABCDE Partnership. E is appointed as managing partner in the
articles of co- partnership. Which of the following statements is correct?
a. E may be removed as managing partner by the vote of controlling partners only if there is valid
cause for removal.
b. E may only be removed by the vote of all partners including the managing partner regardless of the
reasons.
c. E’s decision on acts of management may be reversed by the majority vote of the partners even if E
acted in good faith.
d. Majority vote of all partners is necessary for act of administration.
39. A, B, C, D and E are general partners in ABCDE Partnership. E is appointed as managing partner in a
separate document other than the articles of co- partnership. Which of the following statements is
correct?
a. E may be removed as a managing partner by the vote of controlling partners regardless of the
reasons.
b. E’s decision on acts of management requires ratification of the majority of the partners to be
valid.
c. E’s decision on acts of management may not be reversed by the majority vote of the partners to
be valid.
d. Majority vote of all partners is necessary for act of administration.

40. A, B, C, D and E are general partners in ABCDE Partnership. No one is appointed as managing partner.
Which is correct?
a. All the partners shall be considered agents and whatever any one of them may do alone shall bind the
partnership.
b. Unanimous vote is necessary for the validity of an act of management.
c. The vote of controlling partner shall prevail in cases of dispute in act of management.
d. Majority vote is enough for act of strict dominion.