LGS 200 Exam 4 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Right to participate in management - CORRECT ANSWER A situation in which,
unless otherwise agreed, each partner has a right to participate in the management of a
partnership and has an equal vote on partnership matters.
Right to share in profits - CORRECT ANSWER Unless otherwise agreed, the UPA
mandates that a general partner has the right to an equal share in the partnership's profits and
losses
Action for an accounting - CORRECT ANSWER A formal judicial proceeding in
which the court is authorized to (1) review the partnership and the partners' transactions and
(2) award each partner his or her share of the partnership assets.
Unlimited personal liability of a general partner - CORRECT ANSWER A general
partner's personal liability for the debts and obligations of the general partnership.
Joint and Several Liability - CORRECT ANSWER Tort liability of partners together
and individually. A plaintiff can sue one or more partners separately. If successful, the
plaintiff can recover the entire amount of the judgment from any or all of the defendant-
partners who have been found liable.
Joint liability - CORRECT ANSWER Liability of partners for contracts and debts of
the partnership. A plaintiff must name the partnership and all of the partners as defendants in
a lawsuit.
Dissolution of General Partnership - CORRECT ANSWER the change in the
relationship of partners in a partnership caused by any partner ceasing to be associated in the
carrying on of the business
Winding up - CORRECT ANSWER The process of liquidating a partnership's assets
and distributing the proceeds to satisfy claims against the partnership
,Wrongful dissolution - CORRECT ANSWER a situation in which a partner withdraws
from a partnership without having the right to do so at that time
Distribution of Assets on dissolution - CORRECT ANSWER After partnership assets
have been liquidated and reduced to cash, the proceeds are distributed to satisfy claims
against the partnership. The debts are satisfied in the following order [UPA Section 40(b)]:
1. Creditors (except partners who are creditors)
2. Creditor-partners
3. Capital contributions
4. Profits
Right of suvivorship - CORRECT ANSWER a rule providing that, on the death of a
general partner, the deceased partner's right in specific partnership property vests in the
remaining partner(s); the value of the deceased partner's interest in the partnership passes to
his/her beneficiaries or heirs.
Limited partnership - CORRECT ANSWER Many businesses operate as limited
partnerships. Limited partnerships have both general partners and limited partners, whose
rights, duties, and liabilities differ
General partners of a limited partnership - CORRECT ANSWER partners in a limited
partnership who invest capital, manage the business, and are personally liable for partnership
debts
Limited partners - CORRECT ANSWER partners in a limited partnership who invest
capital but do not participate in management and are not personally liable for partnership
debts beyond their capital contributions
Revised Uniform Limited Partnership Act (RULPA) - CORRECT ANSWER A revision
of the ULPA that provides a comprehensive law for the formation, operation, and dissolution
of limited partnerships.
, Certificate of Limited Partnership - CORRECT ANSWER A document that two or
more persons must execute and sign that makes a limited partnership legal and binding
Defective Formation - CORRECT ANSWER incorrect creation of a limited partnership
that occurs when (1) a certificate of limited partnership is not properly filed, (2) there are
defects in a certificate that is filed, or (3) some other statutory requirement for the creation of
a limited partnership is not met
Limited Partnership Agreement (Articles of Limited Partnership) - CORRECT
ANSWER a document that sets forth the rights and duties of general and limited
partners; the terms and conditions regarding the operation, termination, and dissolution of a
partnership; and so on.
Unlimited Liability of general partners of a limited partnership - CORRECT
ANSWER general partners are personally liable for the debts and obligations of a
limited partnership
Limited Liability of limited partners of a limited partnership - CORRECT
ANSWER Limited partners are liable only for the debts and obligations of a limited
partnership up to their capital contribution; they are not personally liable for the debts and
obligations of a limited partnership
Section 303 of the RULPA - CORRECT ANSWER a section that permits limited
partners to participate in the management of a limited partnership without losing their limited
liability shield
Certificate of cancellation - CORRECT ANSWER a document that is filed with the
secretary of state on the dissolution of a limited partnership
Limited Liability Company (LLC) - CORRECT ANSWER An unincorporated business
entity that combines the most favorable attributes of general partnerships, limited
partnerships, and corporations.
Member - CORRECT ANSWER an owner of an LLC
QUESTIONS AND CORRECT ANSWERS
Right to participate in management - CORRECT ANSWER A situation in which,
unless otherwise agreed, each partner has a right to participate in the management of a
partnership and has an equal vote on partnership matters.
Right to share in profits - CORRECT ANSWER Unless otherwise agreed, the UPA
mandates that a general partner has the right to an equal share in the partnership's profits and
losses
Action for an accounting - CORRECT ANSWER A formal judicial proceeding in
which the court is authorized to (1) review the partnership and the partners' transactions and
(2) award each partner his or her share of the partnership assets.
Unlimited personal liability of a general partner - CORRECT ANSWER A general
partner's personal liability for the debts and obligations of the general partnership.
Joint and Several Liability - CORRECT ANSWER Tort liability of partners together
and individually. A plaintiff can sue one or more partners separately. If successful, the
plaintiff can recover the entire amount of the judgment from any or all of the defendant-
partners who have been found liable.
Joint liability - CORRECT ANSWER Liability of partners for contracts and debts of
the partnership. A plaintiff must name the partnership and all of the partners as defendants in
a lawsuit.
Dissolution of General Partnership - CORRECT ANSWER the change in the
relationship of partners in a partnership caused by any partner ceasing to be associated in the
carrying on of the business
Winding up - CORRECT ANSWER The process of liquidating a partnership's assets
and distributing the proceeds to satisfy claims against the partnership
,Wrongful dissolution - CORRECT ANSWER a situation in which a partner withdraws
from a partnership without having the right to do so at that time
Distribution of Assets on dissolution - CORRECT ANSWER After partnership assets
have been liquidated and reduced to cash, the proceeds are distributed to satisfy claims
against the partnership. The debts are satisfied in the following order [UPA Section 40(b)]:
1. Creditors (except partners who are creditors)
2. Creditor-partners
3. Capital contributions
4. Profits
Right of suvivorship - CORRECT ANSWER a rule providing that, on the death of a
general partner, the deceased partner's right in specific partnership property vests in the
remaining partner(s); the value of the deceased partner's interest in the partnership passes to
his/her beneficiaries or heirs.
Limited partnership - CORRECT ANSWER Many businesses operate as limited
partnerships. Limited partnerships have both general partners and limited partners, whose
rights, duties, and liabilities differ
General partners of a limited partnership - CORRECT ANSWER partners in a limited
partnership who invest capital, manage the business, and are personally liable for partnership
debts
Limited partners - CORRECT ANSWER partners in a limited partnership who invest
capital but do not participate in management and are not personally liable for partnership
debts beyond their capital contributions
Revised Uniform Limited Partnership Act (RULPA) - CORRECT ANSWER A revision
of the ULPA that provides a comprehensive law for the formation, operation, and dissolution
of limited partnerships.
, Certificate of Limited Partnership - CORRECT ANSWER A document that two or
more persons must execute and sign that makes a limited partnership legal and binding
Defective Formation - CORRECT ANSWER incorrect creation of a limited partnership
that occurs when (1) a certificate of limited partnership is not properly filed, (2) there are
defects in a certificate that is filed, or (3) some other statutory requirement for the creation of
a limited partnership is not met
Limited Partnership Agreement (Articles of Limited Partnership) - CORRECT
ANSWER a document that sets forth the rights and duties of general and limited
partners; the terms and conditions regarding the operation, termination, and dissolution of a
partnership; and so on.
Unlimited Liability of general partners of a limited partnership - CORRECT
ANSWER general partners are personally liable for the debts and obligations of a
limited partnership
Limited Liability of limited partners of a limited partnership - CORRECT
ANSWER Limited partners are liable only for the debts and obligations of a limited
partnership up to their capital contribution; they are not personally liable for the debts and
obligations of a limited partnership
Section 303 of the RULPA - CORRECT ANSWER a section that permits limited
partners to participate in the management of a limited partnership without losing their limited
liability shield
Certificate of cancellation - CORRECT ANSWER a document that is filed with the
secretary of state on the dissolution of a limited partnership
Limited Liability Company (LLC) - CORRECT ANSWER An unincorporated business
entity that combines the most favorable attributes of general partnerships, limited
partnerships, and corporations.
Member - CORRECT ANSWER an owner of an LLC
