Here is the continuation of the 100 multiple-choice questions on the Indian Partnership Act, 1932:
- In a partnership firm, the authority to bind the firm by acts of partners is based on the principle of:
a) Mutual consent
b) Mutual agency
c) Joint liability
d) Absolute authority
Answer: b) Mutual agency
Explanation: Mutual agency means that any partner can act on behalf of the firm and bind other partners. - Which of the following is NOT a type of partner?
a) Active partner
b) Nominal partner
c) Artificial partner
d) Sleeping partner
Answer: c) Artificial partner
Explanation: There is no concept of an artificial partner under the Act. - The term “partnership property” is defined in:
a) Section 15
b) Section 14
c) Section 18
d) Section 20
Answer: b) Section 14
Explanation: Section 14 deals with property and rights belonging to the firm. - An act done by a partner beyond their authority is:
a) Void
b) Voidable at the firm’s discretion
c) Binding on the firm
d) Illegal
Answer: b) Voidable at the firm’s discretion
Explanation: Acts beyond a partner’s authority may bind the firm if ratified by other partners. - A minor admitted to the benefits of a partnership:
a) Has equal rights as other partners
b) Cannot share profits
c) Cannot be held liable for losses
d) Can dissolve the firm
Answer: c) Cannot be held liable for losses
Explanation: A minor is admitted only to share profits and has no liability for losses. - A partner who lends money to the firm is entitled to:
a) Interest at 10%
b) Interest at 6%
c) No interest
d) Interest only when profits are available
Answer: b) Interest at 6%
Explanation: Section 13(d) provides for 6% interest on loans by partners to the firm. - Registration of a partnership firm is:
a) Mandatory
b) Optional
c) Automatic
d) A court’s discretion
Answer: b) Optional
Explanation: Registration is not mandatory but offers legal advantages under Section 69. - A registered firm can file a suit against:
a) A third party
b) Its partners
c) The government
d) All of the above
Answer: d) All of the above
Explanation: A registered firm can sue for rights enforceable under the law. - Dissolution of a partnership occurs when:
a) One partner retires
b) One partner becomes insolvent
c) Business is wound up
d) All of the above
Answer: d) All of the above
Explanation: Dissolution can occur due to retirement, insolvency, or winding up. - The liability of a retired partner for acts done before retirement is:
a) Ceased automatically
b) Ceased after one year
c) Unlimited unless a public notice is given
d) Limited to their capital contribution
Answer: c) Unlimited unless a public notice is given
Explanation: A retired partner remains liable unless a public notice of retirement is issued. - In case of dissolution of the firm, the first priority in the distribution of assets is given to:
a) Partners’ loans
b) Partners’ capital
c) Outside creditors
d) Partners’ profits
Answer: c) Outside creditors
Explanation: Section 48 prioritizes the payment of outside creditors over partners’ claims. - The doctrine of “holding out” under the Indian Partnership Act applies to:
a) Active partners
b) Retired partners
c) Nominal partners
d) Partners who falsely represent themselves as part of the firm
Answer: d) Partners who falsely represent themselves as part of the firm
Explanation: Under Section 28, the doctrine binds individuals who represent themselves as partners to third parties. - In the absence of an agreement, interest on capital is:
a) Paid at 6%
b) Paid at 10%
c) Not paid
d) Paid only if there are profits
Answer: c) Not paid
Explanation: Section 13(c) states that interest on capital is not payable unless there is an agreement. - A partnership can be dissolved by the court under:
a) Section 39
b) Section 44
c) Section 46
d) Section 49
Answer: b) Section 44
Explanation: Section 44 lists grounds for dissolution by the court. - A partner who takes part in the management of the firm is called:
a) Nominal partner
b) Sleeping partner
c) Active partner
d) Minor partner
Answer: c) Active partner
Explanation: An active partner actively participates in the firm’s management. - Which section defines “Partnership”?
a) Section 4
b) Section 10
c) Section 12
d) Section 14
Answer: a) Section 4
Explanation: Section 4 defines “partnership” as a relationship between persons who agree to share profits of a business. - Which of the following is NOT a mode of dissolution?
a) By mutual consent
b) By insolvency of a partner
c) By a court decree
d) By operation of law
Answer: d) By operation of law
Explanation: Dissolution happens by specific modes mentioned in the Act. - The registration of a partnership firm is done with:
a) Registrar of Companies
b) Registrar of Firms
c) Ministry of Finance
d) High Court
Answer: b) Registrar of Firms
Explanation: Firms are registered with the Registrar of Firms in the concerned state. - Which document is essential for registering a partnership firm?
a) Partnership deed
b) Articles of Association
c) Memorandum of Association
d) Contract agreement
Answer: a) Partnership deed
Explanation: A partnership deed contains the terms and conditions of the partnership and is required for registration. - A partnership firm can be reconstituted in case of:
a) Admission of a partner
b) Retirement of a partner
c) Death of a partner
d) All of the above
Answer: d) All of the above
Explanation: A partnership can be reconstituted when changes occur in its partners.