AICPA Exam CPA-Business 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:

AWill be effectively limited by a formal resolution of the partners of which third parties are aware.

BWill be effectively limited by a formal resolution of the partners of which third parties are unaware.

CWould permit a partner to submit a claim against the partnership to arbitration.

DMust be derived from the express powers and purposes contained in the partnership agreement.

Show Suggested Answer

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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Dottie

1 months 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 months 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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Socorro

4 days ago

Yeah, sticking to the partnership agreement is key in these situations.

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Lina

6 days ago

I agree, D seems like the most logical choice here.

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Kerry

1 months 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 months 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

8 days ago

D) Must be derived from the express powers and purposes contained in the partnership agreement.

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Elise

16 days ago

I agree, the key is for third parties to be aware of the formal resolution.

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Olene

17 days ago

A) Will be effectively limited by a formal resolution of the partners of which third parties are aware.

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Velda

23 days ago

D) Must be derived from the express powers and purposes contained in the partnership agreement.

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Leota

25 days 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

29 days ago

A) Will be effectively limited by a formal resolution of the partners of which third parties are aware.

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Dion

2 months 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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