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Free CPA-Business Exam Braindumps (page: 13)

Page 13 of 132
PDF with 530 Questions

Lisa is a limited partner in a limited partnership. Jen, one of the other limited partners, is seeking to sell her interest in the partnership to Karen and allow Karen to become a new limited partner. Which of the following statements is true?

  1. Lisa may engage in the management of the limited partnership without losing her limited liability.
  2. Jen may transfer her interest and make Karen a new limited partner without the approval of the other partners.
  3. Jen may withdraw from the limited partnership without giving notice to the partnership.
  4. Lisa has a right to vote on the transferring of interest to and admission of Karen as a limited partner.

Answer(s): D

Explanation:

Choice "d" is correct. Limited partners have the right to vote on the transfer of interest and admission of a new partner. Admission of a new partner requires unanimous consent.
Choice "a" is incorrect. A limited partner who acts as a general partner loses her limited liability status to those she acted as a general partner towards.
Choice "b" is incorrect. Partners can freely transfer their interests in profits and losses to third parties, but the third party cannot become a limited partner without the unanimous consent of the other partners.
Choice "c" is incorrect. Limited partners must give 6 months notice of withdrawal in absence of an agreement to the contrary.



Which of the following statements is correct with respect to a limited partnership?

  1. A limited partner may not be an unsecured creditor of the limited partnership.
  2. A general partner may not also be a limited partner at the same time.
  3. A general partner may be a secured creditor of the limited partnership.
  4. A limited partnership can be formed with limited liability for all partners.

Answer(s): C

Explanation:

Choice "c" is correct. In a limited partnership, a general partner may be a secured creditor of the limited partnership.
Choice "a" is incorrect. In a limited partnership, a limited partner may be an unsecured creditor of the limited partnership.
Choice "b" is incorrect. In a limited partnership, a general partner may also be a limited partner at the same time.
Choice "d" is incorrect. In a limited partnership, only the limited partners will have limited liability. A limited partnership must have at least one general partner and general partners have unlimited liability. The word "all" makes this option wrong.



In general, which of the following statements is correct with respect to a limited partnership?

  1. A limited partner has the right to obtain from the general partner(s) financial information and tax returns of the limited partnership.
  2. A limited partnership can be formed with limited liability for all partners.
  3. A limited partner may not also be a general partner at the same time.
  4. A limited partner may hire employees on behalf of the partnership.

Answer(s): A

Explanation:

Choice "a" is correct. A limited partner has rights similar to those of a corporate shareholder; he must be allowed to review financial and tax information of the limited partnership.
Choice "b" is incorrect. A limited partnership must have one or more general partners, whose liability is unlimited.
Choice "c" is incorrect. One may be both a general and a limited partner simultaneously. Such a person has all of the rights and liabilities of both a limited partner and a general partner.
Choice "d" is incorrect. A limited partner has no management authority, rather he is a passive investor, like a corporate shareholder.



In general, which of the following statements is correct with respect to a limited partnership?

  1. A limited partner will be personally liable for partnership debts incurred in the ordinary course of the partnership's business.
  2. A limited partner is unable to participate in the management of the partnership in the same manner as general partners and still retain limited liability.
  3. A limited partner's death or incompetency will cause the partnership to dissolve.
  4. A limited partner is an agent of the partnership and has the authority to bind the partnership to contracts.

Answer(s): B

Explanation:

Choice "b" is correct. While the general rule is that a limited partner has no liability on partnership debts except to the extent of his agreed-upon contribution, the limited partner will lose this limited liability if he takes part in control of the business, which generally means a limited partner may not manage the business on a day-to-day basis as a general partner could.
Choice "a" is incorrect. Limited partners are not personally liable for partnership debts; their liability generally is limited to their contributions.
Choice "c" is incorrect. Death or incapacity of a general partner will cause a dissolution, but the same is not true of a limited partner.
Choice "d" is incorrect. A limited partner is more like a shareholder in a corporation than like a general partner. Limited partners are not agents of their partnerships and have no authority to bind their partnership on contracts.



Page 13 of 132



Post your Comments and Discuss AICPA CPA-Business exam with other Community members:

Venkatesh commented on September 08, 2023
I don't see Internal Control/Information technology related questions
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Jay jain commented on May 25, 2023
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