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Exam 30: Partnerships and Limited Liability Partnerships

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Question 21

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A limited partnership cannot be dissolved by court decree.

A) True
B) False

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Question 22

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Round-Up Ranch and Smith & Jones,Accountants,are limited liability partnerships (LLPs) .The major features of an LLP are that it limits the personal liability of the partners and

A) it allows the partnership to continue as a pass-through tax entity.
B) LLP statutes do not vary from state to state.
C) it can only do business in the state in which it was formed.
D) only a few states have enacted LLP statutes.

E) B) and C)
F) All of the above

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Question 23

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In a limited partnership,a general partner's dissociation from the firm normally will lead to dissolution unless all partners agree to continue the business.

One can join a partnership even if all other partners do not consent.

Fact Pattern 30-1B (Questions B10-B13 apply) Bryn,Cornell,and Duke are general partners in Equity Lending,a consumer credit,mortgage,and investment firm.Their agreement states that it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners. -Refer to Fact Pattern 30-1B.Bryn's dissociation from the firm results in

Quisa and Reilly are partners in Sport Bikes,which rents and sells bikes,bike accessories,and related gear.Quisa manages the business.Unless the partnership agreement states otherwise,Quisa is

Edgar,Jon,and Phoebe do business as partners in Reliable Movers.Phoebe develops a debilitating illness and can no longer work.Phoebe

No partner is deemed to be an agent of the other partners and of the partnership.

On dissolution,the creditors of the partnership,but not the creditors of the individual partners,can make claims on the partnership's assets.

Nikki and Orlando are limited partners in Port City Exports,a limited partnership.To avoid personal liability for partnership obligations,they must not

Bayside Marina Company and Canoes & Kayaks Inc.,share officers,directors,employees,property,and equipment.In reliance on Bayside Marina's reputation,Delivery Transport,Inc.,contracts to perform services for Canoes & Kayaks,but the firm does not pay.In terms of liability to Delivery Transport,a court is most likely to treat Bayside Marina and Canoes & Kayaks as

A majority of the states treat a partnership as an entity for most purposes.

Fact Pattern 30-1B (Questions B10-B13 apply) Bryn,Cornell,and Duke are general partners in Equity Lending,a consumer credit,mortgage,and investment firm.Their agreement states that it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners. -Refer to Fact Pattern 30-1B.The partners decide to dissolve Equity Lending.Duke collects and distributes the firm's assets.This results in

If no fixed duration of the partnership is specified,the partnership is a partnership in perpetuity,which means that the partnership cannot be dissolved.

The partnership is a pass-through entity and a taxpaying entity.

Limits on a partner's authority normally are effective only with respect to third parties who are notified of the limitation.

Luke and Maya form Northwest Air Express,a general partnership.The essential elements of this partnership do not include

In a limited partnership,a limited partner has full responsibility for the partnership and for all its debts.

Every act of the partner concerning partnership business and "business of the kind" and every contract signed in the partnership's name bind the partner,but not the firm.

Fresco and Garcia form a partnership-HVAC Pros.Garcia's capital contribution is $10,000,and Fresco's is $15,000.The partnership agreement provides that profits are to be shared,with 40 percent for Garcia and 60 percent for Fresco.Later,Garcia makes a $10,000 loan to the partnership when it needs working capital.When the partnership is dissolved,its assets are $50,000,and its debts are $8,000.How should the assets be distributed