Partnership MCQs are very important test and often asked by various testing services and competitive exams around the world. Here you will find all the Important Partnership MCQs for Preparation.
The student can clear their concepts for Partnership online quiz by attempting it. Doing MCQs based Partnership will help you to check your understanding and identify areas of improvement.
What is the minimum number of partners required to form a general partnership?
A) 1
B) 2
C) 3
D) 4
Which of the following is not a characteristic of a partnership?
A) Limited liability
B) Shared decision-making
C) Mutual agency
D) Shared profits and losses
In a limited partnership, who has unlimited liability?
A) General partners
B) Limited partners
C) Both general and limited partners
D) None of the partners
What is the maximum number of partners allowed in a partnership firm in India?
A) 20
B) 30
C) 50
D) No maximum limit
Which of the following is not a type of partnership?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Cooperative partnership
In a partnership, the authority to bind the firm in the ordinary course of business lies with:
A) All partners
B) Majority of partners
C) Managing partner
D) Partner with the highest investment
What type of partnership is formed when two or more professionals, such as lawyers or doctors, join together to form a partnership?
A) General partnership
B) Limited partnership
C) Professional partnership
D) Joint partnership
Which of the following is true regarding the liability of partners in a limited liability partnership (LLP)?
A) Partners have unlimited liability
B) Partners have limited liability
C) Partners have joint and several liability
D) Partners have no liability
Which of the following is a disadvantage of a partnership?
A) Limited liability
B) Shared decision-making
C) Easier to raise capital
D) Unlimited liability
What is the term used to describe the voluntary termination of a partnership by mutual agreement of the partners?
A) Dissolution
B) Liquidation
C) Winding up
D) Bankruptcy
Which of the following is not a characteristic of a limited liability partnership (LLP)?
A) Limited liability for partners
B) Continuity of existence
C) Separate legal entity
D) Centralized management
Which partner is not personally liable for the debts and obligations of the partnership?
A) General partner
B) Limited partner
C) Sleeping partner
D) Active partner
In a partnership, the division of profits and losses among partners is based on:
A) Equal shares for all partners
B) The capital contributed by each partner
C) The number of years in the partnership
D) The expertise of each partner
What is the relationship between partners in a partnership?
A) Employer-employee
B) Principal-agent
C) Lender-borrower
D) Creditor-debtor
When a new partner joins a partnership, the existing partners’ capital accounts will:
A) Increase
B) Decrease
C) Remain the same
D) Become zero
Which of the following is a disadvantage of a partnership compared to a corporation?
A) Limited liability
B) Flexible decision-making
C) Continuity of existence
D) Double taxation
Which of the following statements is true about a silent partner?
A) A silent partner has no legal rights in the partnership.
B) A silent partner has limited liability.
C) A silent partner actively participates in the management of the partnership.
D) A silent partner is responsible for all the debts of the partnership.
In a partnership, what happens to the partnership’s assets and liabilities in the event of a partner’s death?
A) The assets and liabilities are transferred to the surviving partners.
B) The assets and liabilities are transferred to the deceased partner’s heirs.
C) The assets are distributed among all partners, and the liabilities are paid off by the partnership.
D) The partnership is dissolved, and the assets and liabilities are liquidated.
Which of the following is a type of partnership where one partner is actively involved in managing the business, while the other partner only provides capital?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Dormant partnership
What is the term used to describe a situation where one partner incurs a liability for the partnership, and the other partners are also held responsible for it?
A) Joint liability
B) Several liability
C) Unlimited liability
D) Limited liability
Which of the following is an advantage of a partnership?
A) Limited liability
B) Easy to raise capital
C) Centralized decision-making
D) Continuity of existence
In a partnership, what is the term used to describe a partner who is actively involved in managing the business?
A) General partner
B) Limited partner
C) Active partner
D) Sleeping partner
Which of the following is not a legal requirement for forming a partnership?
A) Partnership agreement
B) Business license
C) Capital contribution
D) Intention to carry on business together
In a partnership, the relationship between the partners is governed by:
A) Partnership Act
B) Company Act
C) Taxation Act
D) Labor Act
What is the term used to describe a partner who is not actively involved in managing the business and only provides capital?
A) General partner
B) Limited partner
C) Active partner
D) Sleeping partner
Which of the following is a disadvantage of a limited partnership compared to a general partnership?
A) Limited liability for partners
B) Easier to raise capital
C) Shared decision-making
D) Difficulty in finding suitable partners
What is the term used to describe the process of converting a partnership into a company?
A) Incorporation
B) Dissolution
C) Liquidation
D) Merger
In a partnership, how are the profits and losses shared if there is no agreement among the partners?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
Which of the following is an advantage of a limited liability partnership (LLP)?
A) Joint and several liability
B) Ease of formation
C) Unlimited liability
D) Continuity of existence
In a limited partnership, who is responsible for the day-to-day management of the business?
A) General partners
B) Limited partners
C) Both general and limited partners
D) Professional managers
Which of the following is not a condition for the dissolution of a partnership?
A) Expiry of a fixed term
B) Death of a partner
C) Insolvency of a partner
D) Retirement of a partner
What is the term used to describe a partnership where all partners share the profits and losses equally?
A) Equal partnership
B) Joint partnership
C) Cooperative partnership
D) General partnership
In a limited liability partnership (LLP), how is the liability of partners limited?
A) By the amount of their capital contribution
B) By the number of partners in the LLP
C) By the type of business conducted by the LLP
D) By the duration of the partnership
Which of the following statements is true about the liability of partners in a partnership?
A) Partners have limited liability
B) Partners have joint and several liability
C) Partners have no liability
D) Partners have unlimited liability
When a partner withdraws from a partnership, what happens to their share of the partnership’s assets and liabilities?
A) The assets and liabilities are transferred to the remaining partners.
B) The assets and liabilities are transferred to the withdrawing partner.
C) The assets are distributed among all partners, and the liabilities are paid off by the withdrawing partner.
D) The partnership is dissolved, and the assets and liabilities are liquidated.
What is the term used to describe a partner who is not actively involved in the management of the partnership but whose name is used to give the partnership a false appearance of having more members?
A) Nominal partner
B) Dormant partner
C) Secret partner
D) Silent partner
Which of the following is a disadvantage of a partnership compared to a sole proprietorship?
A) Shared decision-making
B) Unlimited liability
C) Ease of formation
D) Continuity of existence
In a partnership, how are the losses shared among the partners?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
Which of the following is a characteristic of a joint venture?
A) Limited liability
B) Shared profits and losses
C) Separate legal entity
D) Permanent existence
In a partnership, how are the profits shared among the partners?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
In a partnership, what is the term used to describe the process of dividing the partnership’s assets and settling its liabilities upon dissolution?
A) Winding up
B) Incorporation
C) Liquidation
D) Termination
Which of the following statements is true about the decision-making process in a partnership?
A) Decisions are made by the majority of partners.
B) Decisions are made by the managing partner only.
C) Decisions are made by each partner individually.
D) Decisions are made by a vote of all partners.
In a partnership, how are the assets and liabilities initially recorded?
A) In a balance sheet
B) In a profit and loss account
C) In a cash book
D) In a partnership deed
Which of the following is an advantage of a partnership compared to a limited liability company (LLC)?
A) Limited liability for partners
B) Ease of formation
C) Centralized management
D) Continuity of existence
What is the term used to describe a partnership where the partners agree to carry on a single venture for a specific project or period of time?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Temporary partnership
In a partnership, what is the term used to describe a partner who actively participates in the management of the business?
A) General partner
B) Limited partner
C) Active partner
D) Sleeping partner
Which of the following is not a requirement for a valid partnership agreement?
A) Written agreement
B) Agreement to share profits and losses
C) Agreement to carry on a lawful business
D) Agreement to contribute capital
In a limited partnership, who has limited liability?
A) General partners
B) Limited partners
C) Both general and limited partners
D) None of the partners
Which of the following is a disadvantage of a partnership compared to a limited liability partnership (LLP)?
A) Limited liability for partners
B) Flexibility in decision-making
C) Ease of formation
D) Sharing of profits and losses
What is the term used to describe a partner who actively participates in the management of the partnership but whose name is not disclosed to the public?
A) Secret partner
B) Dormant partner
C) Silent partner
D) Nominal partner
In a partnership, how are the profits and losses distributed among the partners if there is no agreement?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
Which of the following is a characteristic of a limited partnership?
A) Shared management responsibilities
B) Limited liability for all partners
C) Unlimited liability for all partners
D) Continuity of existence
In a partnership, what is the term used to describe the process of terminating the partnership and settling its affairs?
A) Dissolution
B) Incorporation
C) Merger
D) Acquisition
Which of the following is not a characteristic of a limited liability partnership (LLP)?
A) Limited liability for partners
B) Separate legal entity
C) Shared decision-making
D) Continuity of existence
In a partnership, what is the term used to describe the agreement between the partners that outlines the rights and obligations of each partner?
A) Partnership deed
B) Memorandum of association
C) Articles of incorporation
D) Bylaws
Which of the following is a disadvantage of a partnership compared to a sole proprietorship?
A) Unlimited liability
B) Ease of formation
C) Shared decision-making
D) Continuity of existence
In a limited liability partnership (LLP), which partners have unlimited liability?
A) General partners
B) Limited partners
C) Both general and limited partners
D) None of the partners
Which of the following statements is true about a partnership?
A) A partnership is a separate legal entity.
B) A partnership has limited liability.
C) A partnership is dissolved upon the death of a partner.
D) A partnership is governed by company laws.
In a partnership, how are the assets and liabilities divided among the partners upon dissolution?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
What is the term used to describe a partnership in which all partners have limited liability?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Limited liability partnership
Which of the following is not a type of partnership?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Public partnership
In a partnership, how are the profits and losses shared if there is no agreement among the partners?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
What is the term used to describe a partnership where the partners have agreed to share profits and losses in a predetermined ratio?
A) Profit-sharing partnership
B) Ratio partnership
C) Proportional partnership
D) Profit-loss partnership
Which of the following is a disadvantage of a limited liability partnership (LLP) compared to a partnership?
A) Unlimited liability for partners
B) Ease of formation
C) Shared decision-making
D) Continuity of existence
In a partnership, what is the term used to describe a partner who has invested capital but is not actively involved in the management of the business?
A) General partner
B) Limited partner
C) Active partner
D) Silent partner
Which of the following is an advantage of a partnership compared to a corporation?
A) Limited liability for partners
B) Centralized decision-making
C) Ease of formation
D) Continuity of existence
In a limited partnership, who is liable for the debts and obligations of the partnership?
A) General partners
B) Limited partners
C) Both general and limited partners
D) None of the partners
What is the term used to describe a partnership where all partners have limited liability and can participate in the management of the business?
A) General partnership
B) Limited partnership
C) Joint partnership
D) Limited liability partnership
In a partnership, what is the term used to describe the process of ending the partnership’s legal existence?
A) Dissolution
B) Incorporation
C) Merger
D) Termination
Which of the following is a characteristic of a partnership?
A) Limited liability for partners
B) Separate legal entity
C) Centralized management
D) Continuity of existence
In a partnership, how are the losses distributed among the partners?
A) Equally among all partners
B) Based on the capital contribution of each partner
C) Based on the experience of each partner
D) Based on the number of years in the partnership
What is the term used to describe a partnership where the partners have agreed to contribute capital but not actively participate in the management of the business?
A) General partnership
B) Limited partnership
C) Active partnership
D) Silent partnership
Which of the following is a disadvantage of a partnership compared to a corporation?
A) Limited liability for partners
B) Centralized decision-making
C) Ease of formation
D) Double taxation
In a limited liability partnership (LLP), what is the liability of partners for the wrongful acts or omissions of other partners?
A) Joint and several liability
B) Unlimited liability
C) Limited liability
D) No liability
Which of the following is not a characteristic of a general partnership?
A) Unlimited liability for partners
B) Shared decision-making
C) Separate legal entity
D) Continuity of existence