1.What is the minimum number of members required to form a partnership in most jurisdictions?
a) 1
b) √2
c) 3
d) 4
2.Which of the following is not a key element of a partnership agreement?
a) Profit sharing
b√) Limited liability
c) Capital contribution
d) Management responsibilities
3.In a general partnership, who has unlimited personal liability for the partnership's debts and obligations?
√a) All partners
b) Only the managing partner
c) Only the silent partner
d) None of the partners
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4.Which type of partnership combines elements of a general partnership and a corporation, offering limited liability to some partners?
a√) Limited partnership
b) Limited liability partnership
c) Joint partnership
d) Silent partnership
5.In a limited partnership, who is typically responsible for the day-to-day management of the business?
a√) General partners
b) Limited partners
c) Both general and limited partners
d) External managers
6.Which of the following is a primary duty of partners in a partnership?
a√) Duty of care
b) Duty of secrecy
c) Duty of non-competition
d) Duty of taxation
7.What is the main benefit of a limited liability partnership (LLP)?
a√) Limited personal liability for all partners
b) Exemption from taxation
c) Ease of formation
d) Profit sharing
8.When can a partnership be dissolved by law?
a) If any partner withdraws
b) After a fixed period
c) If all partners agree
d)√ None of the above
9.Which type of partnership allows partners to enjoy limited liability while actively participating in the management of the business?
√a) Limited liability partnership
b) Joint venture
c) General partnership
d) Silent partnership
10.What is the term for the process of formally ending a partnership and settling its affairs?
√a) Dissolution
b) Incorporation
c) Amendment
d) Merger
11.In a limited partnership, who is typically required to make a capital contribution and share in the profits and losses of the business?
a) General partners
b) Silent partners
√c) Limited partners
d) Managing partners
12.Which type of partnership is often used by professionals like lawyers and accountants?
a) General partnership
b) Limited partnership
√c) Limited liability partnership
d) Silent partnership
13.What is the term for a partner who invests capital but does not participate in the management of the partnership?
a) Active partner
b) Managing partner
√c) Silent partner
d) Limited partner
14.Which duty requires partners to act in the best interests of the partnership and not engage in self-dealing?
√a) Duty of loyalty
b) Duty of secrecy
c) Duty of tax compliance
d) Duty of reporting
15.In a limited liability partnership (LLP), which partners are generally liable for the partnership's debts and obligations?
a) All partners
b) Managing partners
√c) General partners
d) None of the partners
16.What is the term for the termination of a partner's relationship with the partnership without dissolving the partnership itself?
a√) Withdrawal
b) Dissolution
c) Liquidation
d) Incorporation
17.Which type of partnership is not a separate legal entity from its partners?
a) Limited partnership
b) Limited liability partnership
c√) General partnership
d) Corporation
18.What is the maximum number of partners typically allowed in a general partnership?
a) 5
b) 10
√c) No limit
d) 20
19.In a limited liability partnership, how is the liability of partners different from a general partnership?
a) All partners have unlimited liability
b) All partners have limited liability
c√) Managing partners have limited liability, others have unlimited liability
d) All partners have limited liability, except for tax liabilities
20When can a partnership be dissolved by operation of law?
a) If any partner wants to retire
b) If all partners become incapacitated
c✓) If a partner becomes bankrupt
d) If the partnership agreement expires
21.What is a negotiable instrument?
A. A contract between two parties
B. A document that can be freely transferred and is payable to the bearer
C. A non-transferable promissory note
D. A legal statute in commercial law
Answer: B
22.Which of the following is NOT a negotiable instrument?
A. Check
B. Promissory note
C. Bill of exchange
D. Lease agreement
Answer: D
23.What is the primary function of a promissory note?
A. To order the payment of a specific sum of money
B. To promise to pay a specific sum of money
C. To transfer ownership of goods
D. To record a sale transaction
Answer: B
24.Who is the drawer in a bill of exchange?
A. The party making the payment
B. The party to whom the payment is made
C. The party issuing the bill
D. The party endorsing the bill
Answer: C
25.A check drawn on a bank is a type of:
A. Promissory note
B. Bill of exchange
C. Certificate of deposit
D. Draft
Answer: B
26.What is the key feature of a negotiable instrument?
A. It can only be transferred once
B. It can be freely transferred from one party to another
C. It is only valid for a fixed period
D. It requires two witnesses to be valid
Answer: B
27.Which party is primarily liable on a promissory note?
A. The payee
B. The maker
C. The endorser
D. The drawee
Answer: B
28.In a negotiable instrument, what is the "payee"?
A. The person who draws the instrument
B. The person to whom the payment is to be made
C. The person who endorses the instrument
D. The bank that issued the instrument
Answer: B
29.A negotiable instrument that is payable on demand is called:
A. A time instrument
B. A demand instrument
C. A bill of exchange
D. A promissory note
Answer: B
30.Which of the following parties is NOT involved in a promissory note?
A. Drawer
B. Payee
C. Drawee
D. Maker
Answer: C
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