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Free CPA-Business Exam Braindumps (page: 2)

Page 2 of 132
PDF with 530 Questions

ABC Corp. and XYZ Corp. are contemplating entering into an unincorporated joint venture. Such a joint venture:

  1. Will be treated as a partnership in most important legal respects.
  2. Must be dissolved upon the completion of a single undertaking.
  3. Will be treated as an association for federal income tax purposes and taxed at the prevailing corporate rates.
  4. Must file a certificate of limited partnership with the appropriate state agency.

Answer(s): A

Explanation:

Choice "a" is correct. The legal requirements, the consequences, the advantages, and disadvantages of forming a joint venture generally are identical to those of a general partnership. Joint ventures are treated as a partnership in most important legal aspects.
Choice "b" is incorrect. A joint venture need not be dissolved upon the completion of a single undertaking. Joint ventures may be formed for a single transaction or for a related series of transactions.
Choice "c" is incorrect because a joint venture would be taxed like a partnership, not a corporation.
Choice "d" is incorrect because a joint venture, like a partnership, may be formed without filing with the state.



What term is used to describe a partnership without a specified duration?

  1. A perpetual partnership.
  2. A partnership by estoppel.
  3. An indefinite partnership.
  4. A partnership at will.

Answer(s): D

Explanation:

Choice "d" is correct. A partnership at will is a partnership with no definite term (i.e., without specified duration). Such a partnership can be terminated at any time.
Choice "a" is incorrect. A partnership without a specified duration is called a partnership at will, not a perpetual partnership. There is no such thing as a perpetual partnership because a partnership is not perpetual. A partnership may be dissolved after a partner dies or otherwise dissociates from the partnership.
Choice "b" is incorrect. A partnership by estoppel is the appearance of a partnership when there is no formal partnership. If parties who are not partners give the appearance to third parties that they are partners, the law may deem the parties to be a partnership by estoppel. The parties will be treated as partners, even though they are not.
Choice "c" is incorrect. The legal term for a partnership of indefinite duration is a partnership at will, not an indefinite partnership.



A general partnership must:

  1. Pay federal income tax.
  2. Have two or more partners.
  3. Have written articles of partnership.
  4. Provide for apportionment of liability for partnership debts.

Answer(s): B

Explanation:

Choice "b" is correct. A partnership is an organization of two or more persons who carry on a business for a profit.
Choice "a" is incorrect. Partnerships do not pay federal income taxes; the partners report their shares of the partnership's income on their individual returns.
Choice "c" is incorrect. A partnership agreement need not be in writing.
Choice "d" is incorrect. If the partnership agreement is silent on the apportionment of liability for partnership debts, state law or the Uniform Partnership Act will cover the omission.



When a partner in a general partnership lacks actual or apparent authority to contract on behalf of the partnership, and the party contracted with is aware of this fact, the partnership will be bound by the contract if the other partners:

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): B

Explanation:

Choice "b" is correct. "Yes - No."
Rule: The authority of partners is governed by agency law. Under agency law, a principal is not bound to the third party unless the agent had actual authority or apparent authority. When the agent has no actual authority and no apparent authority, the principal (in this case the partnership) will only be liable if it chooses to adopt the agreement (i.e., ratify).
Rule: Amending the partnership agreement (presumably to grant authority) will not cause the partnership to be bound because authority must exist at the time the contract is made or the partnership must ratify the contract. Choices "a", "c", and "d" are incorrect, per the above rules.



Page 2 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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