MCQs on Limited Liability Partnership

A Limited Liability Partnership is a form of business that offers the benefits of both a partnership and a company. It has a legal status and its partners have liability only to the extent of capital they have invested in the firm.

Below is a list of multiple-choice questions and answers on Limited Liability Partnership to help students grasp the main concepts related to this topic.

1. Which of the following is true about a Limited Liability Partnership?
   1. A Limited Liability Partnership is not a distinct entity from its partners
   2. A Limited Liability Partnership is a legal entity separate from its partners
   3. A Limited Liability Partnership is a body corporate
   4. Both b and c are correct

Answer: d

2. Which of the following is true about the number of designated partners required in a Limited Liability Partnership?
   1. A Limited Liability Partnership can have at least two designated partners
   2. A Limited Liability Partnership can have at least three designated partners
   3. A Limited Liability Partnership can have at least seven designated partners
   4. A Limited Liability Partnership can have at least four designated partners

Answer: a

3. What is the exact time limit under which a Limited Liability Partnership must file its annual return with the registrar?
   1. A Limited Liability Partnership must file its annual return within 30 days from the closing of its financial year
   2. A Limited Liability Partnership must file its annual return within 45 days from the closing of its financial year
   3. A Limited Liability Partnership must file its annual return within 15 days from the closing of its financial year
   4. A Limited Liability Partnership must file its annual return within 60 days from the close of its financial year

Answer: a

4. Every Limited Liability Partnership must maintain its books of accounts diligently. Those books of accounts should maintain _________.
   1. Particulars of the receipts and expenditures at the Limited Liability Partnership with the details of those transactions
   2. An inventory of the cost of goods purchased, work in progress, inventories, finished goods as well as the cost of goods sold
   3. A complete record of the assets and liabilities of the Limited Liability Partnership
   4. All of the above

Answer: d

5. Which of the following is the designated place where a Limited Liability Partnership should maintain its accounts?
   1. A Limited Liability Partnership should maintain its accounts at the branch office
   2. A Limited Liability Partnership should maintain its accounts at the corporate office
   3. A Limited Liability Partnership should maintain its accounts at the head office
   4. A Limited Liability Partnership should maintain its accounts at the registered office

Answer: d

6. On what basis should a Limited Liability Partnership maintain its books of accounts for every year of their existence?
   1. A Limited Liability Partnership should maintain its books of accounts on the accrual basis
   2. A Limited Liability Partnership should maintain its books of accounts on the cash basis
   3. A Limited Liability Partnership should maintain its books of accounts based on the double-entry system of accounting
   4. All of the above

Answer: d

7. Which among the following parties in a Limited Liability Partnership should sign the Statement of Account and Solvency?
   1. It should be signed by the designated partners authorised on behalf of the Limited Liability Partnership
   2. It should be signed by one partner authorised on behalf of the Limited Liability Partnership
   3. It should be signed by all partners of the Limited Liability Partnership
   4. It should be signed by at least two partners authorised on behalf of the Limited Liability Partnership

Answer: a

8. The Limited Liability Partnership should file its statement of account and solvency with which of the following parties?
   1. The Limited Liability Partnership should file its statement of account and solvency with the registrar of firms
   2. The Limited Liability Partnership should file its statement of account and solvency with the registrar
   3. The Limited Liability Partnership should file its statement of account and solvency with the registrar of cooperative societies
   4. None of the above

Answer: b

9. Which of the following statements is true about the books of accounts for a Limited Liability Partnership?
   1. The books of accounts for a Limited Liability Partnership must be preserved for four years
   2. The books of accounts for a Limited Liability Partnership must be preserved for two years
   3. The books of accounts for a Limited Liability Partnership must be preserved for eight years
   4. The books of accounts for a Limited Liability Partnership must be preserved for six years

Answer: c

10. Which of the following parties in a Limited Liability Partnership is responsible for fixing the auditor’s remuneration?
    1. The registrar may fix the auditor’s remuneration
    2. The designated partners in a Limited Liability Partnership may fix the auditor’s remuneration
    3. The auditor’s remuneration gets decided as per the procedure laid down in a Limited Liability Partnership agreement
    4. Both b and c are correct

Answer: d

11. Which of the following parties in a Limited Liability Partnership can remove the auditor from their office?
    1. The registrar can remove the auditor
    2. The partners can remove the auditor following the guidelines present in the Limited Liability Partnership agreement
    3. If the Limited Liability Partnership agreement has no provision for removing the auditor, the consent of all partners is necessary to relieve the auditor from their duties
    4. Both b and c are correct

Answer: d

12. Which of the following parties can appoint an auditor if the designated partners in a Limited Liability Partnership fail to select one?
    1. The other partners in the Limited Liability Partnership can appoint an auditor
    2. The registrar of the cooperative societies can appoint an auditor
    3. The registrar of firms can appoint an auditor
    4. The registrar can appoint an auditor

Answer: a

13. Which of the following statements is true about the auditor in the Limited Liability Partnership?
    1. An auditor in a Limited Liability Partnership shall continue to hold office as per the terms of their appointment till they are re-appointed
    2. An auditor in a Limited Liability Partnership shall continue to hold office as per the terms of their appointment for one financial year
    3. An auditor in a Limited Liability Partnership shall continue to hold office as per the terms of their appointment till the new auditors are appointed
    4. Both a and c are correct

Answer: d

14. The statement of account and solvency in a Limited Liability Partnership should be prepared __________.
    1. Within four months from the end of the financial year
    2. Within six months from the end of the financial year
    3. Within three months from the end of the financial year
    4. Within two months from the end of the financial year

Answer: b

15. The Limited Liability Partnership Act, 2008 came into force on ______.
    1. 21st March 2009
    2. 23rd March 2009
    3. 31st March 2009
    4. 30th March 2009

Answer: c

Also See:

• Difference between LLP and Partnership
• Partnership Deed
• What is a Partnership Agreement?