Students should practice Relations of Partners – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.
Relations of Partners – Business Law MCQ Questions with Answers
1. As per section 18, a partner in a partnership firm functions :
(a) In a dual capacity of principal and agent.
(b) As a principal.
(c) As an agent.
(d) Neither as a principal nor as an agent.
Answer:
(a) In a dual capacity of principal and agent.
2. If a partner commits fraud in the conduct of the business of the firm:
(a) He shall indemnify the firm for any loss caused to it by his fraud.
(b) He is not liable to the firm.
(c) He is liable to the partners.
(d) He is liable to the third parties.
Answer:
(a) He shall indemnify the firm for any loss caused to it by his fraud.
3. Partners are bound to carry on the business of the firm _________.
(a) To the greatest common advantage.
(b) For the welfare to the society.
(c) For the advantage of the family members.
(d) For earning’personal profits.
Answer:
(a) To the greatest common advantage.
4. Which are the matters that require unanimous consent of all the partners:
(a) Admission of a partner.
(b) Transfer by a partner of his interest in the firm.
(c) Fundamental change in the nature of the business.
(d) All the above.
Answer:
(d) All the above.
5. The liability of a minor partner is limited to the extent of:
(a) His share in the firm
(b) His personal assets
(c) His share in the firm as well as his personal assets
(d) He is not liable
Answer:
(a) His share in the firm
6. Subject to contract between the partners, a partner does not have any one of the following rights:
(a) Right to receive remuneration.
(b) Right to share profits.
(c) Right to take part in the business
(d) Right to claim interest on capital
Answer:
(a) Right to receive remuneration.
7. A Partner can bind a firm by his act if _________.
(a) Submits a dispute to arbitration.
(b) Withdraws suit or proceeding filed on behalf of the firm.
(c) Transfer immovable property belonging to the firm.
(d) Buys goods on behalf of the firm.
Answer:
(d) Buys goods on behalf of the firm.
8. For ordinary business matters the decisions in the firm are taken on the basis of :
(a) Decision of majority of partners.
(b) Unanimous decision of partners.
(c) 2/3 majority.
(d) 1/3 majority.
Answer:
(a) Decision of majority of partners.
9. For changing the nature of a business:
(a) Consent of all the partners is needed.
(b) Consent of majority of partners is needed.
(c) Consent of court is needed.
(d) Consent of Registrar of firm is needed in reference to conduct of the business.
Answer:
(a) Consent of all the partners is needed.
10. Where a partner has advanced any loan to the firm and the agreement provides for interest, but does not specify any rate, the rate shall be _________.
(a) 6%
(b) 8%
(c) 10%
(d) Nil
Answer:
(a) 6%
11. Property of the firm does not include:
(a) Trademark owned by the firm.
(b) Property acquired by or for the firm.
(c) Goodwill of the business.
(d) Property belonging to the partners.
Answer:
(d) Property belonging to the partners.
12. Notice to a partner operates as notice to the firm.
For such purpose, notice may be given to :
(a) All the partners jointly.
(b) A partner who habitually acts in the business of the firm.
(c) Any two partners.
(d) Only the dormant partners.
Answer:
(b) A partner who habitually acts in the business of the firm.
13. When a partner transfers his share, the transferee of partners share has the following rights:
(a) To take part in the conduct of the business
(b) To require accounts
(c) To inspect books of the firm
(d) To receive the share of the profits of the transferring partner
Answer:
(d) To receive the share of the profits of the transferring partner
14. A minor may give public notice of his decision to continue or withdraw from the firm on his attaining majority within:
(a) Three months
(b) Six months
(c) Nine months
(d) One year
Answer:
(b) Six months
15. When a minor on attaining the age of majority, has elected to become a partner, he becomes personally liable to third parties for all the acts of the firm from the date of his:
(a) Decision to become a partner
(b) Attaining the age of majority
(c) Admission to the benefits of the firm
(d) Attaining majority or decision to become a partner, whichever is earlier
Answer:
(c) Admission to the benefits of the firm
State Whether The Following are True or False:
- It is the duty of the partners to work full time in the business of the firm.
- Partner has a right to receive remuneration.
- A partner can be admitted to the partnership with the consent of majority of the partners.
- A partner is not the agent of the other partners.
- On becoming major, the liability of a minor admitted to the benefits of partnership becomes unlimited from the fate of majority.
- Where a partner is entitled to interest on the capital he will be paid interest only if there are profits.
- If a partner advances money to the firm he will be entitled to interest @ 6% p.a. from the firm only in case of profits.
Answer:
- False
- False
- False
- False
- False
- True
- False