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AICPA CPA-Business Exam - Topic 3 Question 106 Discussion

The apparent authority of a partner to bind the partnership in dealing with third parties:
C) Would permit a partner to submit a claim against the partnership to arbitration.
A) Will be effectively limited by a formal resolution of the partners of which third parties are aware.
B) Will be effectively limited by a formal resolution of the partners of which third parties are unaware.
D) Must be derived from the express powers and purposes contained in the partnership agreement.

AICPA CPA-Business Exam - Topic 3 Question 106 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 106
Topic #: 3
[All CPA-Business Questions]

The apparent authority of a partner to bind the partnership in dealing with third parties:

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Suggested Answer: C

Choice 'c' is correct. The most logical sequence in planning and controlling capital expenditures is to begin with identifying capital addition projects and other capital needs.

Choice 'a' is incorrect. Analyzing capital addition proposals omits other capital needs.

Choice 'b' is incorrect. Analyzing and evaluating all promising alternatives is beyond the scope of planning and controlling capital expenditures.

Choice 'd' is incorrect. Developing capital budgets is the same as planning and controlling capital expenditures.


by Zena at Jan 24, 2025, 05:59 PM

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Melita
7 months ago
B is misleading, it doesn't protect the partnership effectively.
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Emogene
8 months ago
D makes sense, authority should come from the agreement.
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Dean
8 months ago
Wait, can a partner really bind the partnership without everyone knowing?
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Eileen
8 months ago
Totally agree, awareness is key!
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Serita
8 months ago
A is correct, third parties need to know about the resolution.
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Nina
9 months ago
I’m leaning towards C, but I’m not confident. It seems like arbitration could be related, but I’m not sure how it connects to apparent authority.
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Franklyn
9 months ago
I feel like I’ve seen a question like this before in practice exams. I think D could be right because it mentions express powers in the partnership agreement, which is a key concept.
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Valentin
9 months ago
I'm not entirely sure, but I remember something about apparent authority being tricky. Maybe B is correct? It talks about third parties being unaware, which could complicate things.
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Rosalind
9 months ago
I think the answer might be A, since it mentions that third parties need to be aware of the resolution. That seems to align with what we learned about binding authority.
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Shelba
9 months ago
This seems like a straightforward application of partnership law principles. I'll focus on understanding the difference between the partner's actual authority and the apparent authority that third parties can rely on.
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Antonio
9 months ago
I'm a bit confused by the wording of the question. Does the "apparent authority" refer to what the third parties perceive, or what's actually in the partnership agreement? I'll need to re-read this carefully.
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Aron
9 months ago
I'm pretty confident I know the answer to this one. The correct option is B - the formal resolution will limit the partner's authority, even if third parties are unaware of it.
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Ethan
9 months ago
Okay, let's see. I think the key here is whether the third parties are aware of the formal resolution limiting the partner's authority. I'll need to review that part closely.
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Theron
9 months ago
Hmm, this seems like a tricky one. I'll need to think carefully about the concept of apparent authority and how it relates to the partnership agreement.
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Dottie
1 year ago
Ah, the joys of partnership law. I'm just hoping I don't have to deal with any 'apparent authority' issues in my future business ventures. Option D sounds like the safest bet here.
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Shawn
1 year ago
Haha, if only we could just randomly pick answers and get them right! But in this case, I think D is the way to go. Gotta stick to the partnership agreement, you know?
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Pearlie
1 year ago
Absolutely, D is the safest option to ensure the authority of a partner.
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Aretha
1 year ago
Definitely, it's important to follow the guidelines set in the agreement.
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Socorro
1 year ago
Yeah, sticking to the partnership agreement is key in these situations.
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Lina
1 year ago
I agree, D seems like the most logical choice here.
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Kerry
1 year ago
C is an interesting choice, but I don't believe it's the correct answer here. Submitting a claim to arbitration doesn't seem directly related to the question of apparent authority.
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Chau
1 year ago
Option B seems tricky, but I don't think that's the right answer. The third parties need to be aware of the formal resolution in order for it to effectively limit the partner's authority.
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Abel
1 year ago
D) Must be derived from the express powers and purposes contained in the partnership agreement.
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Elise
1 year ago
I agree, the key is for third parties to be aware of the formal resolution.
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Olene
1 year ago
A) Will be effectively limited by a formal resolution of the partners of which third parties are aware.
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Velda
1 year ago
D) Must be derived from the express powers and purposes contained in the partnership agreement.
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Leota
1 year ago
I agree, it's important for third parties to be aware of any formal resolutions to limit a partner's authority.
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Quentin
1 year ago
A) Will be effectively limited by a formal resolution of the partners of which third parties are aware.
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Dion
1 year ago
I think option D is the correct answer. The partner's authority must be derived from the partnership agreement, not just a formal resolution that third parties may not be aware of.
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Kanisha
1 year ago
So, it's crucial for partners to have a well-drafted partnership agreement that outlines their powers and limitations.
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Quentin
1 year ago
In that case, it might be tricky. It's important for partners to clearly define their authority in the agreement to avoid any confusion.
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Tamie
1 year ago
But what if the partnership agreement is not clear on the partner's authority? Would that limit their ability to bind the partnership?
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Dalene
1 year ago
I agree, option D makes sense. The authority of a partner should come from the partnership agreement.
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Casie
1 year ago
I'm not sure, but I think it's either A or D.
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Wynell
1 year ago
I agree with Leatha, the authority of a partner must come from the partnership agreement.
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Leatha
1 year ago
I think the answer is D.
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