PARTNERSHIP DIAGNOSTIC EXERCISES

1. A contract where two or more persons bind themselves to contribute money, property or industry to
a common fund with the intention of dividing the profits among themselves.

a. Voluntary association
b. Corporation
c. Partnership
d. Sole proprietorship

ANSWER: C

2. One of the following is not a characteristic of contract of partnership.

A. Real, in that the partners must- deliver their contributions in order for the partnership contract to be
perfected.
B. Principal, because it can stand by itself.
C. Preparatory, because it is a means by which other contracts will be entered into.
D. Onerous, because the parties contribute money, property or industry to the common fund.

ANSWER: A

3. One of the following is not a requisite of a contract of partnership. Which is it?

A. There must be a valid contract.

B. There must be a mutual contribution of money, property or industry to a common fund.
C. It is established for the common benefit of the partners which is to obtain profits and divide the same
among themselves.
D. The articles are kept secret among the members.

ANSWER: D

4. The minimum capital in money or property except when immovable property or real rights thereto.
are contributed, that will require the contract of partnership to be in a public instrument and be
registered with the Securities and Exchange Commission

a. P5,000.00
b. P10,000.00
c. P3,000.00
d. P30,000.00

ANSWER: C

5. If the partnership has the minimum capital mentioned in No. 4, but the contract is not in a public
instrument or the same is not recorded with the SEC, the partnership:
A. is void.
B. is voidable.
C. does not acquire juridical personality
D. Still acquires juridical personality.

ANSWER: D

6. Joseph and Edward entered into a universal partnership of all present property. At the time of their
agreement, Joseph had a four-door apartment which he inherited from his father 3 years earlier.
Edward, on the other hand, had a fishpond which he acquired by dacion en pago from Robert. During
the first year of the partnership, rentals collected on the four-door apartment amounted to P480,000.00
while fish harvested from the fishpond were sold for P300,000.00. During the same period, Edward
received by way of donation a vacant lot from an uncle. The partners had a stipulation that future
property shall belong to the partnership. Which of the following does not belong to the common fund of
the partnership?

a. Fishpond.
b. Rental of P480,000.00
c. Apartment.
d. Vacant land.

ANSWER: D

7. Vincent and James entered into a universal partnership of profits. At the time of the execution of the
articles of partnership, Vincent had a two-door apartment which he inherited from his father 3 years
earlier. James, on the other hand, had a fleet of taxis which he purchased 2 years before. In the first year
of the partnership, Vincent earned P 500,000.00-as a radio talent, while James won P1,000,000.00 in the
lotto. During the same period, rentals of P120,000.00 were collected from the apartment, while fare
revenues of P200,000.00 were realized from the operation of the fleet of taxis. Which of the following
belongs to the partnership?

A. Two-door apartment
B. Lotto winnings of P 1,000,000.00.
C. Salary of P500,00.00
D. Fleet of taxis.

8. A partnership formed for the exercise of a profession which is duly registered is an example of:

A. Universal partnership of profits,

B. Universal partnership of all present property.
C. Particular partnership.
D. Partnership by estoppel.

ANSWER: C

9. Three of the following partnership contracts are void. Which one is not?
A. A universal partnership of all present property between husband and wife.
B. A universal partnership of profits between a man and a woman living together as husband and wife
without the benefit of marriage
C. A particular partnership between husband and wife.
D. A universal partnership of profits between a private individual and a public officer.

ANSWER: C

10. John, Albert and Wilfred are partners in JAW Enterprises. Not having established yet their credit
standing, the three partners requested Simon, a well-known businessman, to help them negotiate a loan
from Carlos, a money lender. With the consent of John, Albert and Wilfred, Simon represented himself
as a partner of JAW Enterprises. Thereafter, Carlos granted a loan of P 150,000.00 to JAW Enterprises.
What kind of partner is Simon?

A. Managing partner.
B. Liquidating partner.
C. Ostensible partner.
D. Partner by estoppel.

ANSWER: D

11. Refer to No, 10. Assuming that JAW Enterprises was unable to pay the loan on due date at which
time the assetS of the partnership amounted only to P 120,000.00. From whom may Carlos collect the
payment?

A. Simon only for the whole amount of P 120,000.00

B. John, Albert and Wilfred who are liable jointly for P50,000.00 each.
C. JAW Enterprises for its assets of P 120,000.00 thereafter John, Albert and Wilfred from their separate
property at Php 10,000.00 each.
D. JAW Enterprises for its assets of P 120,000.00, thereafter, John, Albert, Wilfred and Simon from their
separate assets at P7,500.00 each.

ANSWER: D

12. Teresa, Olga, Pamela and Sonia, partners in TOPS Company Limited, a trading company, have
contributions of P50,000.00 each. Teresa and Olga are general partners; Pamela, a limited partner; and
Sonia, a general-limited partner. TOPS Company Limited purchased merchandiseon credit from Moret
Sales Co. amounting to P180,000.00. On due date, however, TOPS Company Limited was unable to pay.
Accordingly, Moret Sales Co. filed a case of collection against the partnership which by then had assets
amounting to P 150,000.00. From whom may Moret Sales Co. collect the sum of P 180,000.00?

A.The partnership for its assets of P 150,000.00; thereafter, from Teresa and Olga at P 15,000.00 each
from their separate assets.
B. Teresa and Olga only at P90,000.00 each from their separate assets.
C. The partnership for its assets of P 150,000.00; thereafter, from Teresa, Olga, and Sonia at P 10,000.00
each from their separate property. However, Sonia can recover P5,000.00 each from Teresa and Olga.
D. Teresa, Olga and Sonia at P60,000.00 each. Thereafter, Sonia can recover from Teresa and Olga
P30,000.00 each.

ANSWER: C
13.Which of the following losses will not cause the dissolution?
a. Loss before delivery of a specific thing which A promised to contribute to the partnership.
b. Loss of a specific thing after its delivery to and acquisition of its ownership by the partnership from
the partner who contributed the same.
c. Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, he
having reserved the ownership thereof.
d. Loss before delivery of a specific thing where the partner promised to contribute only its use and
enjoyment, reserving the ownership thereof.

ANSWER: B

14. Gregory, Edmond and Mark are partners in GEM Company with contributions of P10,000.00;
P40,000.00 and P50,000.00 respectively. Their agreement shows that they will share in the profits in the
ratio of 2:3:4. During the year, the partnership sustained a loss of P9,000.00. How shall this loss be
divided among the partners?

A. Equally at P3,000.00 each.

B. Gregory, P900.00; Edmond, P3,600.OO, and Mark, P4,500.00.
C. Gregory, P2,000.00; Edmond, and Mark, P4,000.00
D. The partners must establish first a loss sharing agreement before the loss may be divided because
they failed to have an agreement on the division of loss.

ANSWER: C

15. Which of the following stipulations is valid?

a. A stipulation excluding a capitalist partner from profits.
b. A stipulation exempting a capitalist partner from losses.
c. A stipulation exemptifig an industrial partner from
d. A stipulation excluding an industrial partner from profits.

ANSWER: C

16. A Partner can engage in business for himself without the consent of his co-partners if he is:
A. a capitalist partner whether or not the business will engage in is of the same kind as or different from
the partnership business,
B. an industrial partner whether or not the business he will engage in is of the same kind as or different
from the partnership business.
C. a capitalist partner and the business he will is of a kind different from the engage in partnership
business.
D. an industrial partner and the business he will engage in is of j a kind different from the
partnership business.

ANSWER: C

17. Which of the following statements is false when no one among the partners was appointed as
manager?
a. Each partner will be considered as agent of the partnership.
b. Any one may make an important alteration in the immovable property of thE partnership without the
consent of the others provided it is useful to the partnership
c. In case the act of one partner is opposed by another, the decision of the majority of the
partners will prevail.
d. In case of a tie in the voting, the tie shall be resolved by the vote of the partner owning the controlling
interest.

ANSWER: B

18. The following statements pertain either to a partner appointed as manager in the articles of
partnership or through a document after the formation of the partnership,

i. He may be removed as manager only for a just or lawful cause by the vote of the partners owning the
controlling interest.
ii. He may be removed as manager with or without just or lawful cause I by the vote of the partner
owing the controlling interest.
iii. He may perform all acts of administrator despite the opposition of his partners provided he is good
faith.
iv. He may perform all acts of administration in good faith but opposing partners may resort to his
removal if he persists.

Based on the foregoing:

A. I and III pertain to a partner appointed as manager in the articles of partnership.

B. I and III pertain to a partner appointed as manager through a document after the formation of
the partnership
C. II and III pertain to a partner appointed through a document after the formation of the
partnership.
D. I and IV pertain to a partner appointed as manager in the articles of partnership

ANSWER: A

20. The partnership will bear the risk of the loss of three of

the following things. Which is the exception?

a. Things contributed to be sold.

b. Fungible things or those that cannot be kept without deteriorating.

c. Things contributed so that only their use and fruits

will be for the common benefit.

d. Things brought and appraised in the inventory.

ANSWER: C

21. A partner's interest in the partnership is his share of the

profits and surplus which he may assign to a third person,

Which of the following statements concerning such right is

correct?

a. The conveyance of a partner's interest will cause

the dissolution of the partnership.

b. The assignee becomes a partner.

c. The assignee has a right to interfere in the

management of the partnership business.

d. The assignee has the right to receive the profits

which the assigning partner would otherwise be

entitled to.

ANSWER: D

22. Torres is indebted for P5,OOO.00 to MACE Trading

Company, a partnership managed by Mendoza to whom

Torres also owes P 10,000.00. The two debts which are

both demandable are unsecured. Torres remits P4,500.00

to Mendoza in payment of his debt to him.

Accordingly, Mendoza issues a receipt for his own credit.

To which credit should the payment be applied?

a. To Mendoza's credit because the payment made by

Torres is intended for his debt to Mendoza who

issues his own receipt.

b. To both the partnership credit and Mendoza'S

credit proportionately at P 1,500.00 and P3,OOO.OO,

respectively.

c. To Mendoza's credit because its amount is greater

than that of the partnership credit.

d. To the partnership credit because the managing

partner should not prefer hig own interest to that

of the partnership.
ANSWER: B

23. In three of the following wrongful acts of partners,

the partnership is solidarily liable with all the partners to

third persons. Which one is the exception?

a. For loss or injury caused to a third person by

reason of the wrongful act or omission of a partner

acting in the ordinary course of business.

b. Where a partner acting the scope of his

apparent authority receives money or property of a

third person and misapplies it.

c. Where the partnership receives money or property

of a third person in the ordinary course of business

and such money or property is misapplied by a

partner while it is in the custody of the

partnership.

d. For loss or injury caused to a third person by

reason of ' the use of partnership property by a

partner for personal purpose.

ANSWER: D

24. Benito, Ignacio, Gregorio, Artemio and Servando are

partners in BIGAS Company which' is engaged in the

buying and selling of rice. Benito is the manager. Ignacio

was also given a special power of attorney by the

partnership to buy a van for the company. No other power

was given to all the partners. In which of the following acts

or contracts is the partnership not bound by the act of

the partner?

a. Ignacio buying rice for the partnership from

Teodoro who has no knowledge of Ignacio's lack of

authority.

b. Ignacio buying a van for the partnership from

Teresa.

c. Gregorio buying a van for the partnership from

Thelma who has no knowledge of Gregorio's lack of

authority.

d.Benito selling rice for the partnership.

Answer: c

25. Assuming that no fraud is committed by or consented to

by the partner concerned, which of the following

statements is false?

a. Notice to any partner relating to partnership affairs

while already a partner is notice to the

partnership.

b. Knowledge of a partner acting on the particular

matter acquired by him while already a .partner is

knowledge of the partnership.

c. Knowledge of a partner acting on the particular

matter obtained by him before he became a partner

is knowledge of the partnership provided he still

remembers the same

d. Knowledge of partner. not acting on the particular

matter obtained by him before he became a partner

is knowledge of the partnership.

answer: d

26. Which of the following statements is incorrect?

a. Partnership creditors are preferred as to

partnership assets.

b. Partnership creditors are preferred as to each

partner's separate assets.

c. A partner's separate creditors are preferred as to

the partner's separate assets.

d. A partner's separate creditors may attach a

partner's share in the partnership assets.

answer: b

27. The change in the relation of the partners caused by any

ceasing to be associated in the carrying on the business is

known as:

a. termination of the partnership.

b. winding up of partnership affairs.

c. liquidation of the partnership business.

d. dissolution of the partnership.

answer: d

28. A decree by the court is necessary to dissolve a general

partnership based on three of the following grounds.

Which one will not require such decree but will cause the

automatic dissolution of the partnership?

a. The business of the partnership can only be

carried on at a loss.

b. A partner is shown to be of unsound mind.

c. A partner has been guilty of such conduct as tends

to affect prejudicially the carrying on of the

business.

d. A partner is civilly interdicted

Answer: d
29. Three of the following will cause the automatic dissolution

of a general partnership, Which one will not?

a. When any event makes it unlawful for the business

of the partnership to be carried on or for the

members to carry it on in partnership,

b. Expulsion of any partner from the business bona

fide in accordance with such a power conferred by

the agreement between the partners.

c. A partner becomes in any way incapable of

performing his part of the partnership contract.

d. The insolvency of a partner or of the partnership,

Answer: c

30. When is the partnership not bound by the act/ s of a

partner after dissolution in the following cases?

a. Acts necessary to wind up partnership affairs.

b. Acts to complete transactions begun before

dissolution.

c. New transactions where the third person is a

previous creditor and there was a publication of

the dissolution in a newspaper of general

circulation in the place or places where the

business had been carried on but such third

person has not read it.

D. New transactions where the third person is a new

creditor and there was publication of the

dissolution in a newspaper of general circulation in

the place or places where the business had been

Carried on but such creditor has not read it.

 Answer: d

31. The partnership is not bound in three of the following

acts of a partner after dissolution. However, it is bound in

one. Which is it?

a. Where the partner acting is insolvent.

b. When it is unlawful to carry on the business.

c. When the partner has no authority to wind up

partnership affairs and the third person is a previous creditor who had no
knowledge of the partner's lack of authority.

d. When a partner has no authority to wind up

partnership affairs and the third person is a new

creditor who has not read the publication of the

lack of authority of the partner in a newspaper of

general circulation in the place or places where the

partnership business is carried on.

answer: c

32. What is the order of payment of liabilities of a dissolved

general partnership using the code number representing

each liability?

I. Those owing to partners other than for capital or

for profits.

II. Those owing to creditors other than partners.

III. Those owing to partners in respect of profits.

IV. Those owing to partners in respect of capital.

A. I, II, III, IV
B. II,I, IV, III
C. II, I, III, IV
D. I, II, IV, III

Answer: b
33. In a limited partnership where there are 4 partners:

a. All the partners must be limited partners.

b. The number of limited partners must be equal to

the number of general partner, that is, 2:2.

c. The number of limited partners must be greater

than the number of general partners, that is, 3: l.

d. It is enough that there is one limited partner; the

rest may all be general partners.

answer: d

34. A limited partner may contribute:

a. Money and/or property.

b. Money and/or services.

c. Property and/or services.

d. Services only.

answer: a

35. A limited partner shall be liable as general partner in three

of the following cases. Which one is the exception?

a. When he is a general-limited partner as stated in the certificate.

b. When he takes part in the control of the business.
c. When he participates in the management of the business.
d. When his surname which appears in the partnership name is also the
surname of the general partner.

Answer: d

36. Which of the following omissions will make a partnership formed as a

limited partnership liable as a general partnership?

I. The certificate is not signed and sworn to by all the

Partners.

II. The certificate is not registered with the Securities

 and Exchange Commission.

III. The partnership name docs not include the word

"Limited" or "Ltd.", its abbreviation, in the

certificate.

a. I and II.

b. II and III.

c. I and III.

d. I, II and III.

Answer: d

37. A person admitted to all 'the rights of a limited partner

who has died or has assigned his interest in the

partnership is known as:

a. An ostensible partner.

b. A liquidating partner,

c. A substituted limited partner.

d. A general-limited partner.

answer: c

38. If the assignee does not become the partner referred to in

the preceding number, his rights do not include:

a. The receipt of the assignor's share of the profits.

b. The receipt of the assignor's Other compensation by way of income.

c. The return of the assignor's contribution.

d. The inspection of partnership books or account of partnership

transactions

answer: d

39. What is the order of payment of liabilities of a dßSÖ1ve

limited partnership using the code number representing

each liability?
 I. Those owing to general partners other than for

capital or for profits.

II. Those owing to creditors including limited

partners, except those to limited partners on

account of their contributions and general

partners.

III. Those owing to limited partners by way of their

share in the profits and other compensation by

way of income.

IV. Those owing to limited partners in respect to the

capital of their contributions.

V. Those owing to general partners in respect of

capital.

VI. Those owing to general partners in respect of

profits.

A. I, II, III, IV, V, VI.

B. II, I, III, IV, V, VI.

C. II, I, III, IV, VI, V.

D. II, III, IV, I, VI, V.

Answer: d

40. Which of the following will not cause the automatic

dissolution of a limited partnership?

A. Death of a general partner.

b. Death of a limited partner.

c. Insolvency of a general partner.

d. Insanity of a general partner.

answer: b
41. One of the distinctions between a partnership and a

corporation is that a partnership:

a. May be formed by one person.

b. Is created by operation of law.

c. Acts through a board of directors.

d. May exist for an indefinite period.

Answer: d

42. Josephine, Ellen, Wilma, Edith and Lydia are partners in

JEWEL Company, Ltd, Josephine, Ellen and Wilma are

general partners, Edith is a general-limited partner, while

Lydia is a limited partner. Based on the foregoing

information, which of the following statements is false?

a. Josephine, Ellen and Wilma may be held liable

with their separate property after the exhaustion of

partnership assets.

b. Edith may participate in the management of the

partnership.

c. Edith may not be held liable with her separate

property for partnership debts after the exhaustion

of partnership assets.

d. Lydia may not be held liable with her separate

property for partnership debts after the exhaustion

of partnership assets.

answer: c

44. Which of the following will not cause the automatic

dissolution of a general partnership?

a. Death of a partner.
b. Insolvency of a partner.

c. When the partnership bUsiness becomes unlawful.

d. Insanity of a partner.

Answer: d