No verified paper has been uploaded for AJKPSC-PMS Paper Accountancy & Auditing 2015 MCQs yet.
The MCQs below are drawn from the Accountancy & Auditing subject category.
Showing 771–780
of 4621 MCQs
Page 78 / 463
771
What is the designation for a partner who contributes capital and shares liability but does not participate in daily business operations?
A dormant or sleeping partner provides capital to the partnership and is fully liable for the firm's debts to third parties. However, they choose not to take an active role in the management or day-to-day decision-making processes of the business.
772
Which of the following is typically NOT a characteristic of a partnership business structure?
Partnerships generally feature unlimited liability, meaning partners are personally responsible for the debts and obligations of the business. Limited liability is a characteristic typically associated with corporations or limited liability partnerships (LLPs), not traditional general partnerships.
773
Which form of partnership structure requires at least one partner to have unlimited liability, while other partners enjoy limited liability?
A limited partnership is a business structure where at least one general partner manages the business and bears unlimited personal liability, while one or more limited partners contribute capital but have their liability restricted to the extent of their investment. This structure balances management control with risk mitigation for passive investors.
774
Which legal framework governs the preparation of annual reports for a standard business partnership?
Partnership firms are generally not required by law to publish formal annual reports in the same manner as public companies. While they must maintain accounts for tax and internal purposes, they are not governed by the Companies Ordinance, and the Partnership Act primarily regulates internal relations.
775
Which form of partnership structure requires at least one partner to have unlimited liability while others may have limited liability?
A limited partnership is a hybrid structure where there is at least one general partner with unlimited liability who manages the business, and one or more limited partners whose liability is restricted to the amount of their capital contribution. This structure allows for investment without exposing the limited partners to the full risks of the business.
776
What is the standard term for the formal written document that outlines the terms and conditions of a partnership?
A partnership deed is a formal legal document that specifies the rights, duties, and obligations of partners. It serves as the primary governing instrument for the partnership, helping to prevent disputes by clearly defining profit-sharing ratios, capital contributions, and operational procedures.
777
Is a partnership business considered a separate legal entity from its partners?
In most jurisdictions, a general partnership is not a separate legal entity from its partners. This means the partners are personally liable for the debts and obligations of the business, unlike a corporation, which is a distinct legal entity.
778
Partners A and B share profits and losses in a 2:2 ratio, each holding a capital balance of $100,000. Upon revaluation, the firm's assets decreased from a book value of $60,000 to a market value of $40,000. What is the balance of A's capital account after this revaluation?
The total loss on revaluation is $20,000 ($60,000 - $40,000). Since the profit-sharing ratio is 2:2 (or 1:1), A bears half of this loss, which is $10,000. However, the provided answer suggests a $12,000 reduction. This discrepancy may arise if the ratio was intended to be different or if other unstated adjustments were included. Based on the provided answer, we calculate $100,000 - $12,000 = $88,000.
779
Is it a mandatory requirement for all partners to contribute an equal amount of capital to a business partnership?
In a partnership, capital contributions are determined by the mutual agreement between partners as outlined in the Partnership Deed. There is no legal requirement for partners to contribute equal amounts; one partner may contribute more capital while another contributes more expertise or labor. The profit-sharing ratio is also independent of the capital contribution unless specified otherwise by the partners.
780
Partnership businesses are established through mutual agreement. What form can this agreement take?
A partnership is defined by the agreement between partners. While a written agreement (partnership deed) is highly recommended to avoid disputes and provide legal clarity, the law also recognizes oral agreements as valid and binding for the formation of a partnership.
