Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions

AICPA CPA-Business Exam - Topic 2 Question 4 Discussion

Posted by Cordelia on May 06, 2022 at 07:37 AM

Locke and Vorst were general partners in a kitchen equipment business. On behalf of the partnership, Locke contracted to purchase 15 stoves from Gage. Unknown to Gage, Locke was not authorized by the partnership agreement to make such contracts. Vorst refused to allow the partnership to accept delivery of the stoves and Gage sought to enforce the contract. Gage will:

Suggested Answer: D

Choice "d" is correct. Every partner is an agent of the partnership and has apparent authority to bind the partnership to contracts that appear to carry on in the usual way the business of the partnership. It would be usual for a partner in a kitchen equipment business to have authority to purchase stoves. Thus, Gage will win because of Locke's apparent authority.

Choice "a" is incorrect. Every partner is an agent for his partnership and has apparent authority to bind the partnership to contracts that appear to carry on in the usual way the business of the partnership.

Choice "b" is incorrect. Every partner is an agent of the partnership.

Choice "c" is incorrect. Locke did not have express authority to purchase the stoves. The facts state that Locke was not authorized to purchase the stoves and thus lacked express authority.


Get Premium CPA-Business Questions as Interactive Web-Based Practice Test or PDF Real Exam Format Detailed Explanations Instant Access Get Your Practice Test
9 comments · newest first
KE
Kelvin 11 months ago
B seems right too, Locke wasn't acting as an agent here.
IS
Isaac 12 months ago
Definitely A, partnerships have strict rules!
GL
Glendora 12 months ago
Wait, are you sure? I thought Locke had some power as a partner.
RH
Rhea 12 months ago
Totally agree, no authority means no contract!
SE
Serina 1 year ago
Gage will lose since Locke wasn't authorized.
AN
Annelle 1 year ago
Okay, I think I've got a strategy here. I'll focus on the legal requirements first, then consider which option promotes the most efficiency.
CR
Craig 1 year ago
I think Hazop is more about safety checks rather than the overall methodology for assessing combinations.
TU
Tuyet 1 year ago
Okay, let me think this through. The key is to isolate the swap files so they don't impact the performance of the OS or data. So I'd say the best option is to put them on their own dedicated datastore.
WI
Willow 1 year ago
Developing a common culture sounds key, but I'm not sure how it compares to the other options. I wish we had more examples on that.
0/2000 characters

Save Cancel