[Partnership Agreement] Rufus, Sven, and Igor Are Partners in a Health

question 20

Multiple Choice

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
-Are Rufus and Sven correct that Igor is outvoted?

• A) Yes, partnership decisions are made by majority vote.
• B) No, partnership decisions must be unanimous.
• C) No, partnership decisions must be made by 4/5 majority.
• D) Rufus and Sven are correct as to some decisions, but some partnership decisions require agreement by all partners.
• E) Yes, because all partnership decisions, other than the decision to terminate the partnership, must be made by majority vote.

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Definitions:

General Journal

A ledger where double-entry accounting transactions are initially recorded, including details such as date, accounts affected, and amounts.

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, used to prepare financial statements.

Inventory

The total amount of goods and materials a business holds for the purpose of resale or production.

Balance Sheet Column

Part of a financial statement that displays the company's assets, liabilities, and shareholders' equity at a specific point in time.