through 27 are based on the following:

Downs, Frey, and Vick formed the DFV general partnership to act as manufacturers' representatives.

The partners agreed Downs would receive 40% of any partnership profits and Frey and Vick would each receive 30% of such profits. It was also agreed that the partnership would not terminate for five years. After the fourth year, the partners agreed to terminate the partnership. At that time, the partners' capital accounts were as follows: Downs, $20,000;

Frey, $15,000; and Vick, $10,000. There also were undistributed losses of $30,000.

25. Which of the following statements about the form of the DFV partnership agreement is correct?

a. It must be in writing because the partnership was to last for longer than one year.

b. It must be in writing because partnership profits would not be equally divided.

c. It could be oral because the partners had explicitly agreed to do business together.

d. It could be oral because the partnership did not deal in real estate.

26. Vick's share of the undistributed losses will be a. $0

b. $1,000 c. $9,000 d. $10,000

27. If Frey died before the partnership terminated a. Downs and Vick, as a majority of the partners,

would have been able to continue the partnership.

b. The partnership would have continued until the five year term expired.

c. The partnership would automatically dissolve.

d. Downs and Vick would have Frey's interest in the partnership.

__________

28. A joint venture is a(an)

a. Association limited to no more than two persons in business for profit.

b. Enterprise of numerous co-owners in a nonprofit undertaking.

c. Corporate enterprise for a single undertaking of limited duration.

d. Association of persons engaged as co-owners in a single undertaking for profit.

29. Unless otherwise provided in a general partnership agreement, which of the following statements is correct when a partner dies?

The deceased The deceased partner's partner's

executor estate would The would be free partnership automatically from any would be become a partnership dissolved partner liabilities automatically

a. Yes Yes Yes

b. Yes No No

c. No Yes No

d. No No No

30. Park and Graham entered into a written partnership agreement to operate a retail store. Their agreement was silent as to the duration of the partnership. Park wishes to dissolve the partnership.

Which of the following statements is correct?

a. Park may dissolve the partnership at any time.

b. Unless Graham consents to a dissolution, Park must apply to a court and obtain a decree ordering the dissolution.

c. Park may not dissolve the partnership unless Graham consents.

d. Park may dissolve the partnership only after notice of the proposed dissolution is given to all partnership creditors.

31. Ted Fein, a partner in the ABC Partnership, wishes to withdraw from the partnership and sell his interest to Gold. All of the other partners in ABC have agreed to admit Gold as a partner and to hold Fein harmless for the past, present, and future liabilities of ABC. A provision in the original partnership agreement states that the partnership will continue upon the death or withdrawal of one or more of the partners. The agreement to hold Fein harmless for all past, present, and future liabilities of ABC will

a. Prevent partnership creditors from holding Fein personally liable only as to those liabilities of ABC existing at the time of Fein's withdrawal.

b. Prevent partnership creditors from holding Fein personally liable for the past, present, and future liabilities of ABC.

c. Not affect the rights of partnership creditors to hold Fein personally liable for those liabilities of ABC existing at the time of his withdrawal.

d. Permit Fein to recover from the other partners only amounts he has paid in excess of his proportionate share.

32. Lark, a partner in DSJ, a general partnership, wishes to withdraw from the partnership and sell Lark's interest to Ward. All of the other partners in DSJ have agreed to admit Ward as a partner and to hold Lark harmless for the past, present, and future liabilities of DSJ. As a result of Lark's withdrawal and Ward's admission to the partnership, Ward a. Acquired only the right to receive Ward's share of

DSJ profits.

b. Has the right to participate in DSJ's management.

c. Is personally liable for partnership liabilities arising before and after being admitted as a partner.

d. Must contribute cash or property to DSJ to be admitted with the same rights as the other partners.

33. Dill was properly admitted as a partner in the ABC Partnership after purchasing Ard's partnership interest. Ard immediately withdrew from the partnership. The partnership agreement states that the partnership will continue on the withdrawal or admission of a partner. Unless the partners otherwise agree,

a. Dill's personal liability for partnership debts incurred before Dill was admitted will be limited to Dill's interest in partnership property.

b. Ard will automatically be released from personal liability for partnership debts incurred before Dill's admission.

c. Ard will be permitted to recover from the other partners the full amount that Ard has paid on account of partnership debts incurred before Dill's admission.

d. Dill will be subjected to unlimited personal liability for partnership debts incurred before being admitted.

34. On dissolution of a general partnership, distributions will be made on account of:

I. Partners' capital accounts

II. Amounts owed partners with respect to profits III. Amounts owed partners for loans to the

partnership in the following order.

a. III, I, II.

b. I, II, III.

c. II, III, I.

d. III, II, I.

35. Long, Pine, and Rice originally contributed

$100,000, $60,000, and $20,000, respectively, to form the LPR Partnership. Profits and losses of LPR are to be distributed 1/2 to Long, 1/3 to Pine, and 1/6 to Rice. After operating for one year, LPR's total assets on its books are $244,000, total liabilities to outside creditors are $160,000 and total capital is

$84,000. The partners made no withdrawals. LPR has decided to liquidate. If all of the partners are solvent and the assets of LPR are sold for $172,000

a. Rice will personally have to contribute an additional $8,000.

b. Pine will personally have to contribute an additional $4,000.

c. Long, Pine, and Rice will receive $6,000, $4,000, and $2,000, respectively, as a return of capital.

d. Long and Pine will receive $28,000 and $4,000, respectively, and Rice will have to contribute an additional $20,000.

1Q-5

36. Eller, Fort, and Owens do business as Venture Associates, a general partnership. Trent Corp.

brought a breach of contract suit against Venture and Eller individually. Trent won the suit and filed a judgment against both Venture and Eller. Trent will generally be able to collect the judgment from

a. Partnership assets only.

b. The personal assets of Eller, Fort, and Owens only.

c. Eller's personal assets only after partnership assets are exhausted.

d. Eller's personal assets only.

Chapter One: Non-Corporate Entities