MCQs On Indian Partnership Act, 1932 Part 1

Q.1:- An act of a firm means:

• Any partner or agent of the firm which gives rise to a right enforceable by or against the firm
• Any act by all the partners
• Any omission by all the partners
• All of the above

Q.2:- 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. Does it mean that losses are not shared:

• A minor may be admitted in partnership, only for the profits, but he cannot share in losses.
• It also depends on the partnership agreement. A person may share the profits but may not share in losses.
• Sharing of profits also include losses (negative profits)
• All of the above.

Q.3:- Where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is called as:

• Particular partnership
• Partnership for a fixed term
• partnership at will
• None of the above

Q.4:- What information shall be given to the Registrar of Firms by a registered partnership firm:

• New opening/closing of the existing branch, if any.
• Change in the name of and address of the partner (s)/change in the constitution of the firm.
• What there is change in the name of the firm or in location of the principal place of business.
• All of the above.

Q.5:- Who can inspect the Register and filed documents at the office of the Registrar:

• Any Government servant
• The Partners of the firm
• The partners of the other firms
• Any person

Q.6:- What are the right of partners after dissolution:

• To have the surplus distributed among the partners or their representatives according to their rights.
• To have business wound up after dissolution
• To have the property of the firm applied in payment of the debts and liabilities of the firm.
• All of the above

Q.7:- 40. Where any member of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate, then, in the absence of a contract to the contrary, the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or to interest at the rate of on the amount of his share in the property of the firm:

• nine per cent, per annum
• eighteen per cent, per annum
• six per cent per annum
• twelve per cent, per annum

Q.8:- The dissolution of partnership means:

• It means the dissolution of partnership between all the partners of a firm
• It means the change in the relations of the partners
• It means the reconstitution of the firm.
• None of the above.

Q.9:- In what circumstances a partner may retire:

• In accordance with an express agreement by the partners
• Where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.
• With the consent of all the other partners
• All of the above.

Q.10:- What would be the position, where a minor elects not to become a partner:

• He shall be entitled to sue the partners for his share of the property and profits.
• His rights and liabilities shall continue to be those of a minor under this section up to the date on which he gives public notice.
• His share shall not be liable for any acts of the firm done after the date of the notice.
• All of the above

Q.11:- After a partner’s death the business is continued in the old firm name. Whether the legal heirs of the deceased partner are liable for any acts of the firm:

• The continued use of the name or of the deceased partner’s name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the firm done after his death.
• If the estate of the deceased person’s property is insufficient to make good, the personal assets of the legal heirs will be liable for any of the acts done by the firm.
• The estate of the deceased person is liable for any of the act done by the firm.
• The legal heirs of the deceased partners shall be liable for any of the act done by the firm after the demise of the partner

Q.12:- The partners in a firm may, by contract between the partners:

• restrict the implied authority of any partner
• extend the implied authority of any partner
• None of the above
• Both A and B are correct

Q.13:- Whether a notice given to a partner, who habitually acts in the business of the firm of any matter relating to the affairs of the firm, will be deemed as notice to the firm:

• It will deemed as personal information to that partner
• Yes, it operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner
• It depends on the nature of the concerned partner whether he inform so to other partners
• No, it will not deemed as notice to the firm.

Q.14:- What would be the position where a minor elects to become a partner.

• His share in the property and profits of the firm shall be the share to which he was entitled as a minor
• His rights and liabilities as a minor continue up to the date on which he becomes a partner
• He also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of partnership
• All of the above

Q.15:- When there is any change in the constitution of the firm, what would be the statue of the continuing guarantee given to the firm

• It shall be revoked as to future transactions from the date of any change in the constitution of the firm.
• Since it is the continuing guarantee, hence it be continuing.
• Only the parties to the continuing guarantee can only decide over the matter.
• None of the above.

Q.16:- Where a partner wilfully or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business, or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him. The other partner(s) may:

• The partnership firm comes to an end automatically
• The other partners may decide to leave the firm.
• File a suit in the court for the dissolution of the firm.
• The other partners may decide to expel the concerned partner

Q.17:- Who is not liable for the acts of the partners done after dissolution, if done before the dissolution, until public notice is given of the dissolution

• A partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm (sleeping or dormant partner).
• The estate of a partner who dies
• Who is adjudicated an insolvent
• All of the above

Q.18:- Where a partner has paid a premium on entering into partnership of a fixed term, and the firm is dissolved before the expiration of that term otherwise than by the death of a partner, whether any repayment of the premium is permissible:

• He will not be entitled for repayment of the premium if the dissolution is mainly due to his own misconduct
• He will not be entitled for repayment of the premium if the dissolution is in pursuance of an agreement containing no provision for the return of the premium or any part of it
• He shall be entitled to repayment of the premium or of such part thereof as may be reasonable, regard being had to the terms upon which he became a partner and to the length of time during which he wasa partner
• All of the above

Q.19:- Whether a partner after dissolution of the partnership firm, carry on the business in the erstwhile business name of the firm

• He can use the business name of the dissolved firm name, if he has brought the goodwill of the firm.
• He can’t use the business name of the dissolved firm.
• He can use the business name of the dissolved firm, provided there was a contract between the partners of the dissolved firm
• Both the points mentioned at A and C are correct

Q.20:- The State Government may appoint Registrars of Firms for the purposes of this Act, every Registrar shall be deemed

• To be a Central Government Servant.
• To be a public servant within the meaning of section 21 of the Indian Penal Code
• To be State Government Servant
• To be a private servant

Q.21:- What is the penalty for submission of false particulars to the Registrar of Firms:

• He shall be punishable with imprisonment v- which may extend to three months, or with fine, or with both
• He shall be punishable with imprisonment which may extend to four months, or with fine, or with both.
• He shall be punishable with imprisonment which may extend to two months, or with fine, or with both
• He shall be punishable with imprisonment which may extend to one months, or with fine, or with both

Q.22:- What matters require notice to Registrar of Firms under section 63, and Public Notice by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relate, has its place or principal place of business

• The dissolution of a registered firm
• The election to become or not to become a partner in a registered firm by a person attaining majority who was admitted as a minor to the benefits of partnership
• Retirement or expulsion of a partner from a registered firm
• All of the above

Q.23:- What is the amount of fee which shall accompany with the documents sent to the Registrar of Firms, or which shall be payable for the inspection of documents in the custody of the Registrar of Firms, or for copies from the Register of Firms:

• The fees prescribed by each of the State shall not exceed the maximum fees specified in Schedule I of the Indian Partnership Act, 1932
• The State Government may by notification in the Official Gazette make rules describing the schedule of fees.
• Both A and B are correct.
• None of the above.

Q.24:- Non-registration of a firm will not affect:

• The right of the partner to sue for the dissolution of the firm, or for the accounts of the dissolved firm, or for share of the property of the dissolved firm.
• All of the following
• The right to any suit or claim of set-off not exceeding Rs. 100 in value
• The right of a firm or partners of a firm having no place of business in India.

Q.25:- Where a partner has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 190 or has allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as arrears of land revenue due by the partner.

• The court may not dissolve the firm at the instance of any other partner(s).
• The court may direct other partners to reconstitute the firm by excluding that concerned partner
• The court may dissolve the firm at the instance of any other partner(s)
• The court may expel the concerned partner, who has done wrong, from the partnership firm

Q.26:- How a firm may be dissolved

• A firm may be dissolved by the Court order.
• A firm may be dissolved by the Court order
• A firm may be dissolved in accordance with a contract between the partners
• All of the above.

Q.27:- On attaining the majority, the minor partner has to decide and give a public notice within the prescribed period, whether he will continue as partner in the firm or will quit. What is that prescribed period:

• Within twelve months of his attaining majority or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later
• Within three months of his attaining majority or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later
• Within six months of his attaining majority or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later
• Within nine month of his attaining majority or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later

Q.28:- In which conditions a person may be deemed as partner by estoppels or holding out:

• When he by his conduct represents himself to be a partner in a firm
• When knowingly permits himself to be represented, to be a partner in a firm.
• When he expressly by words spoken or written let the others that he is a partner in a firm.
• All of the above

Q.29:- M/s XYZ is partnership firm and X, Y and Z are the partners. During the course of business travel, partner X recovered a sum of Rs. 15000 in cash from the debtor of the firm and credit in his personal bank account. The act of X will amounts to:

• After utilising the amount for few days, he returned back the money to the firm, so it will not come under the mis-appropriation of the funds.
• Nothing wrong in it, since he has personally made efforts in realising the dues from the debtor.
• Mis-appropriating the funds of the firm and utilisation of the same for the personal gain.
• None of the above.

Q.30:- What are the general duties of a partner:

• To render true accounts and full information of all things affecting the firm to any partner or his legal representative
• To carry on the business of the firm to the greatest common advantage
• To be just and faithful to each other
• All of the above.

Q.31:- A consideration is must for every contract. Partnership is also an agreement enforceable at law, hence it is also a contract to carry on the business for profit. Whether consideration, which is of essence for the formation of a contract, is essential for the formation of the partnership

• Partnership is an extension of the law of agency hence no consideration is required
• Yes, consideration is must for the formation of the partnership.
• There is no need to have consideration in formation of the partnership since no consideration is required to create an agency.
• Only A and C are correct.

Q.32:- After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners shall continue:

• To complete transactions begun but unfinished at the time of the dissolution.
• To wind up the affair of the firm
• Both A and B are correct.
• None of the above.

Q.33:- What shall be the treatment of goodwill in settling the accounts of a firm after dissolution:

• The assessment of the amount of goodwill is a difficult task and cannot be precisely calculated, hence it should not be considered
• The goodwill shall, subject to contract between the partners, be included in the assets, and it may be sold either separately or along with other property of the firm.
• The goodwill is an intangible assets and should not be accounted for.
• None of the above.

Q.34:- How the settlements of debts will be made in case there are joint debts due from the firm, and also separate debts due from any partner:

• Debts of the firm shall be paid first out of the property of the firm, but in case of private debts of the partners, is shall be paid in last(if there is residue) after paying of all the dues of the firm
• Debts of the firm shall be paid first out of the property of the firm, but in case of private debts of the partners, is shall be paid in last(if there is residue) after paying of all the dues of the firm.
• Debts of the firm shall be paid first out of property of the firm and if there is any surplus, it shall be distributed among the partners
• Both A and C are correct.

Q.35:- Which is the implied authority of a partner:

• To carry on the business of the firm, in the usual way.
• Compromise or relinquish any claim or portion of a claim by the firm
• Submit a dispute relating to the business of the firm to arbitration
• Open a banking account on behalf of the firm in his own name

Q.36:- Subject to contract between the partners, the property of the firm includes:

• Acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of business of the firm
• The goodwill of the business.
• All property and rights and interests in property originally brought into the stock of the firm
• All of the above.

Q.37:- Where partnership deed is silent, which of the following statement is NOT correct:

• The partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm.
• A partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of 18% perannum.
• A partner is not entitled to receive remuneration for taking part in the conduct of the business
• Where a partner is entitled to interest on the capital subscribed by him such interest shall be payable only out of profits

Q.38:- A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a change on such interest, does entitle the transferee, during the continuance of the firm

• To require accounts of the firm
• To inspect the books of the firm
• Only to receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners
• To interfere in the conduct of the business of the firm

Q.39:- What is the liability of a retiring partner, after the date of his retirement'.

• He shall not be liable for the act done by other partners during his tenurein the partnership firm.
• He and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement
• He shall be liable for the acts done by him only on behalf of the firm during his tenure, towards the third party.
• Only A and B are correct.

Q.40:- An outgoing partner may carry on a business competing with that of the firm and hemay advertise such business, but, subject to contract to the contrary, he may not:

• Solicit the custom of persons who were dealing with the firm before he ceased to be a partner. Agreements in restraint of trade.
• Use the firm name
• Represent himself as carrying on the business of the firm
• All of the above

Q.41:- The dissolution of firm means:

• It means the dissolution of partnership between all the partners of a firm.
• It means the change in the relations of the partners.
• It means the reconstitution of the firm.
• Only B and C are correct.

Q.42:- What are certain contingencies when the firm has to be dissolved (subject to contract):

• By the death of a partner and by the adjudication of a partner as an insolvent.
• If constituted for a fixed term, by the expiry of that term
• If constituted to carry out one or more adventures or undertakings, by the completion thereof
• All of the above.