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Test: Limited Liability Partnership (LLP) - UGC NET MCQ


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10 Questions MCQ Test UGC NET Commerce Preparation Course - Test: Limited Liability Partnership (LLP)

Test: Limited Liability Partnership (LLP) for UGC NET 2024 is part of UGC NET Commerce Preparation Course preparation. The Test: Limited Liability Partnership (LLP) questions and answers have been prepared according to the UGC NET exam syllabus.The Test: Limited Liability Partnership (LLP) MCQs are made for UGC NET 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Limited Liability Partnership (LLP) below.
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Test: Limited Liability Partnership (LLP) - Question 1

Statement 1: An LLP (Limited Liability Partnership) must apply for PAN and TAN numbers as part of its registration process.

Statement 2: Annual returns and financial statements are not required to be filed with the ROC (Registrar of Companies) after the initial registration.

Which of the statements given above is/are correct?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 1

Statement 1 is correct because an LLP is required to apply for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) as part of its formal registration and tax compliance process.

Statement 2 is incorrect as LLPs are mandated to file annual returns and financial statements with the ROC every year, regardless of the initial registration.

Therefore, the correct answer is Option A: 1 Only.

Test: Limited Liability Partnership (LLP) - Question 2

What is a key feature of a Limited Liability Partnership (LLP) in India?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 2

A Limited Liability Partnership (LLP) in India requires that at least one of the designated partners be a resident Indian. This ensures that there is a legal entity within the country responsible for compliance and accountability. The LLP structure combines the flexibility of a partnership with the limited liability feature of a corporation, allowing partners to shield their personal assets from business debts. An interesting fact is that LLPs have become increasingly popular among professionals and businesses in India due to the benefits of simplified compliance and reduced liability.

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Test: Limited Liability Partnership (LLP) - Question 3

What is a key advantage of a Limited Liability Partnership (LLP) compared to a traditional partnership?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 3

A significant benefit of a Limited Liability Partnership (LLP) is that individual partners are protected from personal liability for the debts and obligations of the LLP, unlike in a traditional partnership where partners are personally liable. This structure combines the flexibility of a partnership with the protective features of a corporation, making it an attractive option for professionals such as lawyers and accountants. An interesting fact about LLPs is that they are particularly popular in the United Kingdom and the United States, with specific regulations governing their formation and operation.

Test: Limited Liability Partnership (LLP) - Question 4

Assertion (A): The LLP Agreement is crucial for defining the roles and responsibilities of partners within a Limited Liability Partnership.

Reason (R): The LLP Agreement is optional and not a legal requirement under the LLP Act 2008.

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 4
  • The Assertion is true because the LLP Agreement outlines the details regarding partners' roles, rights, and responsibilities.
  • The Reason is false since the LLP Agreement is mandatory under the LLP Act 2008.
  • Therefore, the Reason does not explain the Assertion, making Option C the correct choice.
Test: Limited Liability Partnership (LLP) - Question 5

Statement 1: Forming a Limited Liability Partnership (LLP) in India requires adherence to specific legal formalities as outlined in the LLP Act of 2008.

Statement 2: The registration process for an LLP is generally considered complex, making it advisable to seek guidance from legal experts.

Which of the statements given above is/are correct?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 5

Both statements are correct. The formation of a Limited Liability Partnership (LLP) in India indeed requires compliance with specific legal requirements set forth in the LLP Act of 2008, which governs the registration and operation of LLPs. Additionally, while the process can seem complex due to various requirements, it is beneficial to seek assistance from legal experts to ensure a smooth registration process. Hence, the correct answer is Option C: Both 1 and 2.

Test: Limited Liability Partnership (LLP) - Question 6

What is a key benefit of forming a Limited Liability Partnership (LLP) in India?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 6

The main benefit of forming an LLP is the flexibility in management structure that it offers. Partners can define their rights, duties, and profit-sharing arrangements through a Partnership Agreement, allowing for tailored governance that suits the needs of the partners involved. This flexibility is one of the reasons why many entrepreneurs choose LLPs over other business structures. Interestingly, LLPs combine elements of traditional partnerships with limited liability protections, making them a popular choice for startups and small businesses.

Test: Limited Liability Partnership (LLP) - Question 7

Assertion (A): The LLP agreement must include specific details such as partner names and profit-sharing arrangements.

Reason (R): The LLP Act, 2008 mandates that these details are essential for the legal functioning of an LLP.

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 7

- Assertion Analysis: The assertion is true because the LLP agreement indeed requires the inclusion of critical details such as partner names and profit-sharing arrangements to ensure clarity and legal validity.

- Reason Analysis: The reason is also true since the LLP Act, 2008 clearly outlines the necessity of these details for the proper establishment and operation of an LLP.

- Correct Explanation: The reason correctly explains the assertion as it refers directly to the legal requirements set forth by the LLP Act. Therefore, the answer is Option A.

Test: Limited Liability Partnership (LLP) - Question 8

Assertion (A): A Name Approval Letter is required before the incorporation of an LLP.

Reason (R): The Name Approval Letter is issued after the LLP is successfully incorporated.

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 8
  • The Assertion is true because the Name Approval Letter must be obtained prior to the LLP's incorporation.
  • The Reason is false as the Name Approval Letter is issued before incorporation, not after.
  • Thus, the Reason does not explain the Assertion, confirming that Option C is the correct answer.
Test: Limited Liability Partnership (LLP) - Question 9

How many partners are required to form a Limited Liability Partnership (LLP)?

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 9

To establish a Limited Liability Partnership (LLP), a minimum of two partners is necessary. This requirement ensures that the LLP maintains its partnership structure while allowing for flexibility in the number of partners, as there is no upper limit to how many can join. This feature makes LLPs particularly appealing for professional groups where collaboration is essential. A notable aspect of LLPs is that they often require a formal agreement outlining the rights and responsibilities of each partner, which is crucial for clarifying roles and reducing potential conflicts.

Test: Limited Liability Partnership (LLP) - Question 10

Assertion (A): A digital signature is essential for filing electronic forms with the Ministry of Corporate Affairs.

Reason (R): The Ministry of Corporate Affairs requires physical signatures for all submissions to ensure authenticity.

Detailed Solution for Test: Limited Liability Partnership (LLP) - Question 10
  • The Assertion is true as a digital signature is indeed required for electronic filings.
  • The Reason is false because the Ministry of Corporate Affairs accepts digital signatures to ensure authenticity, thereby eliminating the need for physical signatures.
  • Since the Reason does not explain the Assertion correctly, Option B is the correct choice.
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