MCQ on Indian Partnership Act 1932

Here are the final 10 multiple-choice questions on the Indian Partnership Act, 1932:

91. The liability of an incoming partner for the acts of the firm before their admission is:
    a) Limited to their capital contribution
    b) Unlimited
    c) Subject to an agreement between partners and third parties
    d) None of the above
    Answer: c) Subject to an agreement between partners and third parties
    Explanation: An incoming partner is not liable for past acts unless they agree to take on such liability.
92. If a partner becomes insolvent, their rights and liabilities:
    a) Are terminated automatically
    b) Continue as before
    c) Are transferred to their legal representatives
    d) Depend on the firm’s agreement
    Answer: a) Are terminated automatically
    Explanation: An insolvent partner ceases to be a partner, and their rights and liabilities are terminated.
93. The dissolution of a partnership firm by court due to misconduct of a partner is provided under:
    a) Section 39
    b) Section 44
    c) Section 49
    d) Section 69
    Answer: b) Section 44
    Explanation: Section 44 specifies grounds, including misconduct, for dissolution by the court.
94. The term “reconstitution of a firm” refers to:
    a) Complete dissolution of the firm
    b) Change in the structure or agreement of the firm
    c) Termination of partnership by all partners
    d) Conversion of a partnership firm into a company
    Answer: b) Change in the structure or agreement of the firm
    Explanation: Reconstitution happens when there is a change in partners or the agreement, without ending the business.
95. A retiring partner remains liable for acts of the firm after their retirement unless:
    a) A public notice is given
    b) They transfer their rights
    c) The majority of partners agree
    d) They file a legal declaration
    Answer: a) A public notice is given
    Explanation: Public notice is necessary to discharge a retiring partner from liability for future acts.
96. Which of the following partners does NOT participate in the business?
    a) Active partner
    b) Sleeping partner
    c) Nominal partner
    d) Sub-partner
    Answer: b) Sleeping partner
    Explanation: A sleeping partner invests capital but does not take part in the day-to-day business operations.
97. The authority of a partner to act on behalf of the firm can be restricted by:
    a) Partnership deed
    b) Registrar of Firms
    c) A resolution passed by all partners
    d) Both a and c
    Answer: d) Both a and c
    Explanation: The partnership deed or unanimous agreement of partners can restrict a partner’s authority.
98. Under which section can a partnership firm sue or be sued?
    a) Section 20
    b) Section 25
    c) Section 69
    d) Section 75
    Answer: c) Section 69
    Explanation: Section 69 deals with the rights of registered firms to sue or be sued.
99. The goodwill of a firm is:
    a) A tangible asset
    b) An intangible asset
    c) Not considered an asset
    d) Distributed equally among partners
    Answer: b) An intangible asset
    Explanation: Goodwill is an intangible asset representing the reputation of the firm.
100. The term “mutual agency” in a partnership means:
     a) Partners are agents of the firm only
     b) Partners are agents of each other and the firm
     c) Partners are liable only for their own acts
     d) None of the above
     Answer: b) Partners are agents of each other and the firm
     Explanation: Mutual agency implies that each partner acts as an agent of the firm and the other partners.

This concludes the 100 multiple-choice questions on the Indian Partnership Act, 1932 with answers and explanations. If you find any wrong kindly comment.