When two or more people agree to build an enterprise and share its gains and losses, they are said to be in partnership. The Indian Partnership Act 1932 states partnership as the ‘association between an individual who has agreed to share the profits of an enterprise carried on by every partner.
People who have entered into a partnership with one another are independently termed as ‘partners’ and comprehensively termed as ‘firm’. The name under which the trade is carried is called the ‘name of the firm’. A partnership enterprise has no distinct legal entity, apart from the partners comprising it.
Given below are important MCQs on Partnership to analyze your understanding of the topic. The answers are also given for your reference.
Partnership MCQs
1. To start a partnership business, what should be the minimum number of partners?
A) 2
B) 10
C) 4
D) 20
Answer: A
2. What type of agreement is used to form a partnership business?
A) Written agreement
B) Oral agreement
C) Written or oral agreement
D) None of them
Answer: C
3. In partnership, partners liabilities are
A) Unlimited
B) Limited to the capital of the business
C) Limited
D) Both A and C
Answer: A
4. Is a partnership firm considered as a separate legal entity?
A) No
B) Yes
C) Partially Yes
Answer: A
5. What happens when interest on drawings is charged to partner?
A) Credited to partner’s current a/c
B) Not shown in current account
C) Debited to partner’s capital a/c
D) None of the above
Answer: C
6. What is the partnership written agreement known as?:
A) Partnership contract
B) Agreement
C) Partnership deed
D) Partnership Act
Answer: C
7. In absence of a partnership agreement, what will be the percentage of profit sharing ratio between the partners?
A) Unequal
B) Equal
C) It will depend on the experience of a partner
D) It will depend on a partner’s capital
Answer: B
8. Which is not a feature of a partnership business?
A) Ease of formation
B) Limited liability
C) Limited life
D) Mutual agency
Answer: B
9. In which kind of partnership one partner has unlimited liability and other partner have limited liability?
A) Partnership-at-will
B) Limited liability partnership
C) General partnership
D) Particular partnership
Answer: B
10. Which types of partnership have no agreement in terms of the duration of partnership?
A) Partnership-at-will
B) Limited partnership
C) General partnership
D) Particular partnership
Answer: A
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