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General Securities Representative ination (GS) Questions 166–170 (page: 35)

Updated On: 10-Feb-2026

Which of the following is available both to owners of stock and owners of limited partnership participations?

  1. deduction of business expenses from income
  2. a share in the profits from earnings
  3. tax credits
  4. deductions for losses in excess of income earned

Answer(s): B

Explanation:

a share in the profits from earnings. Both shareholders and limited partners share in the profits from earnings.



Which of the following activities by a limited partner may subject the partner to unlimited liability?

  1. participating in management of the partnership
  2. committing the partnership in any manner
  3. making loans beyond those specified in the partnership agreement
  4. all of the above

Answer(s): D

Explanation:

all of the above. Each of these actions by a limited partner causes the loss of limited liability.



Partnership democracy is:

  1. a prohibition against control by a single partner
  2. the sharing of management by all partners
  3. permission granted to the general partner to act outside the partnership agreement
  4. a synonym for silent partner

Answer(s): C

Explanation:

permission granted to the general partner to act outside the partnership agreement. The limited partners may approve of the general partner pursuing an act that is contrary to the partnership agreement.



Which of the following is not prohibited of a general partner?

  1. acting in such a way as to impede the orderly business of the partnership
  2. buying or selling assets of the partnership except to foster the business of the partnership
  3. competing in any way with the partnership
  4. accepting compensation from any other partnership

Answer(s): D

Explanation:

accepting compensation from any other partnership. A general partner may be the partner is more than one partnership.



As a general rule, when a partnership is terminated, in what order are assets distributed?

  1. general creditors, secured lenders, limited partners, general partners
  2. secured lenders, limited partners, general creditors, general partners
  3. secured lenders, general creditors, limited partners, general partners
  4. general creditors, general partners, limited partners, secured lenders

Answer(s): C

Explanation:

secured lenders, general creditors, limited partners, general partners. Creditors first, in order of their security, then partners. General partners are last.



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