Test your knowledge about the meaning of partnership with this MCQ practice test. This quiz contains questions 1-15 covering meaning and features of partnership, the rights of partners, Partnership deed and its importance and provisions in the absence of partnership deed and liabilities of partners in case of unjust profits earned from firm. Answer all questions and get instant feedback with detailed explanations.
How to attempt the quiz
One by one go through the below questions and select the right option. Do all the questions and in the end press submit. Instantly you will get your score and the explanation against each question. Go through your mistakes and reattempt the quiz any number of times as needed.
MCQ Quiz - Practice Questions
MCQ Quiz
Question 1
According to the Indian Partnership Act, 1932 (Section 4), partnership is defined as:
B
Correct Answer: Relation between persons who have agreed to share profits of a business
Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Question 2
The persons who have entered into partnership are collectively called:
A
Correct Answer: Firm
The persons who have entered into a partnership with one another are collectively called a firm.
Question 3
What is the maximum number of partners allowed in a partnership firm as per Companies (Miscellaneous) Rules, 2014?
C
Correct Answer: 50
The Central Government has prescribed maximum number of partners in a firm to be 50 vide Rule 10 of the Companies Miscellaneous Rules, 2014.
Question 4
From a legal viewpoint, partnership is:
B
Correct Answer: Not a separate legal entity from its partners
Partnership from legal viewpoint is not a separate legal entity from its partners since firm's debts are payable from personal assets of partners.
Question 5
Partnership agreement can be:
C
Correct Answer: Either oral or written
Partnership may be an oral agreement or written agreement. The written agreement is called Partnership Deed.
Question 6
Which of the following persons is NOT competent to contract and cannot be a partner?
A
Correct Answer: Persons of unsound mind
Persons of unsound mind are not competent to contract as per Indian Contract Act, 1872, hence cannot be partners.
Question 7
Can a minor be a partner in a partnership firm?
B
Correct Answer: Yes, but only for benefits of the firm
A minor can be a partner in the firm but only in profits and not in losses. Minor should accept or refuse partnership within 6 months on becoming major.
Question 8
In a partnership, each partner acts as:
C
Correct Answer: Both principal and agent of other partners
A partner is a principal as well as agent of other partners. As agent, he represents others and as principal, he is bound by acts of other partners.
Question 9
What must exist for a partnership to be formed?
D
Correct Answer: Agreement among persons
Partnership comes into existence by an agreement, either written or oral. It is the basis of relationship among partners.
Question 10
For accounting purposes, firm is treated as:
A
Correct Answer: Separate from partners
Partners are separate from firm from accounting viewpoint because transactions are recorded in books of account of the firm from firm's viewpoint.
Question 11
The minimum number of partners required to form a partnership is:
B
Correct Answer: Two
There must be at least two persons to form a partnership as per the Partnership Act.
Question 12
Registration of partnership firm under Partnership Act, 1932 is:
B
Correct Answer: Optional
Registration of the firm under Partnership Act, 1932 is optional and not compulsory as per Section 69.
Question 13
The essential requirement regarding business in partnership is:
C
Correct Answer: Can be any lawful business
Partnership is established for a business. The agreement among partners should be to share profits of the business.
Question 14
The business in a partnership may be carried on by:
B
Correct Answer: All or any of the partners acting for all
Business of partnership may be carried on by all partners or by any of them on behalf of other partners acting for all.
Question 15
Every partner (except minor) has the right to:
D
Correct Answer: Participate in management of business
Every partner except the minor partner has the right to participate in the management of the business.
