Mastering TOEIC Reading: Practice Test on Types of Business Partnership Agreements

TOEIC Reading Practice Test: Part 1 & 2

Part 1: Incomplete Sentences

1. The Limited Liability Partnership (LLP) offers partners protection from personal ___ for the company’s debts.
   A. liability
   B. responsibility
   C. accountability
   D. obligation

2. In a general partnership, all partners share ___ in the business’s profits and losses.
   A. equally
   B. partially
   C. minimally
   D. exclusively

3. The ___ partner in a limited partnership has control over business operations and bears unlimited liability.
   A. silent
   B. general
   C. limited
   D. dormant

4. A joint venture agreement is typically formed for a ___ purpose or project.
   A. specific
   B. general
   C. long-term
   D. indefinite

5. Partners in a ___ partnership have equal rights and responsibilities in managing the business.
   A. limited
   B. silent
   C. general
   D. corporate

6. The ___ of a partnership agreement outlines the rights and duties of each partner.
   A. clause
   B. terms
   C. conditions
   D. stipulations

7. A limited partnership must have at least one ___ partner who is liable only to the extent of their investment.
   A. general
   B. silent
   C. active
   D. limited

8. The ___ of profits and losses in a partnership is typically based on each partner’s ownership percentage.
   A. division
   B. allocation
   C. distribution
   D. assignment

9. Partners must act in good ___ and in the best interests of the partnership.
   A. will
   B. faith
   C. intention
   D. manner

10. A ___ partner contributes capital but does not participate in the management of the business.
    A. dormant
    B. active
    C. general
    D. managing

11. The partnership agreement should clearly define the ___ process for admitting new partners.
    A. admission
    B. entry
    C. inclusion
    D. acceptance

12. In most partnerships, major decisions require the ___ of all partners.
    A. approval
    B. consent
    C. agreement
    D. authorization

13. A ___ clause in the partnership agreement outlines how disputes between partners will be resolved.
    A. resolution
    B. mediation
    C. arbitration
    D. conflict

14. The ___ of a partnership occurs when a partner leaves or a new partner joins the business.
    A. dissolution
    B. termination
    C. restructuring
    D. modification

15. Partners have a ___ duty to disclose all relevant information to each other.
    A. legal
    B. moral
    C. fiduciary
    D. contractual

16. A ___ partnership agreement allows for easier transfer of ownership interests.
    A. flexible
    B. rigid
    C. standard
    D. customized

17. The ___ of authority among partners should be clearly defined in the partnership agreement.
    A. delegation
    B. distribution
    C. allocation
    D. assignment

18. A ___ partner is one who is known to the public as a partner but does not actually have any ownership in the business.
    A. nominal
    B. silent
    C. limited
    D. general

19. The ___ of a partnership may be triggered by the death or bankruptcy of a partner.
    A. termination
    B. dissolution
    C. expiration
    D. conclusion

20. Partners have the right to ___ the partnership’s books and records at any reasonable time.
    A. access
    B. inspect
    C. review
    D. examine

21. A ___ partnership agreement can help prevent misunderstandings and conflicts between partners.
    A. verbal
    B. implied
    C. written
    D. informal

22. The ___ of losses in a partnership is typically proportional to each partner’s ownership stake.
    A. sharing
    B. division
    C. allocation
    D. distribution

23. A ___ partner is one who invests in the business but does not take part in its management.
    A. silent
    B. sleeping
    C. passive
    D. inactive

24. The partnership agreement should specify the ___ for resolving disputes between partners.
    A. mechanism
    B. procedure
    C. protocol
    D. method

25. In a limited liability partnership, partners are protected from ___ caused by the actions of other partners.
    A. debts
    B. losses
    C. liabilities
    D. obligations

26. The ___ of a partnership refers to its legal termination and winding up of affairs.
    A. closure
    B. ending
    C. cessation
    D. dissolution

27. A ___ partner is one who actively participates in the management and operations of the business.
    A. working
    B. managing
    C. operating
    D. executive

28. The partnership agreement should outline the process for ___ of partnership interests.
    A. transfer
    B. sale
    C. assignment
    D. conveyance

29. Partners have a duty of ___, which means they must act in the best interests of the partnership.
    A. care
    B. diligence
    C. loyalty
    D. honesty

30. The ___ of profits among partners is typically specified in the partnership agreement.
    A. sharing
    B. splitting
    C. division
    D. distribution

Different types of business partnership agreements

Part 2: Text Completion

Text 1:

In the world of business, partnership agreements play a crucial role in defining the relationships between co-owners. These agreements come in various forms, each with its own unique characteristics. The most common type is the (31) partnership, where all partners share equal responsibility and liability. In contrast, a (32) partnership involves both general partners who manage the business and limited partners who invest but have restricted liability. For professionals seeking liability protection, a (33) liability partnership (LLP) offers a suitable structure. Lastly, businesses looking to collaborate on a specific project often form a (34) , which is typically temporary in nature.

31. A. limited
    B. general
    C. silent
    D. corporate

32. A. limited
    B. general
    C. joint
    D. silent

33. A. limited
    B. general
    C. joint
    D. silent

34. A. corporation
    B. sole proprietorship
    C. joint venture
    D. franchise

Text 2:

When drafting a partnership agreement, several key elements must be addressed. First and foremost, the agreement should clearly outline the (35) of profits and losses among partners. It’s also crucial to define the (36) and responsibilities of each partner, including their roles in decision-making processes. The agreement should specify the (37) for admitting new partners or handling the departure of existing ones. Additionally, a well-crafted partnership agreement includes provisions for (38) resolution to manage potential conflicts effectively.

35. A. allocation
    B. accumulation
    C. assessment
    D. arrangement

36. A. duties
    B. tasks
    C. jobs
    D. assignments

37. A. rules
    B. procedures
    C. guidelines
    D. regulations

38. A. problem
    B. dispute
    C. conflict
    D. disagreement

Text 3:

Limited Liability Partnerships (LLPs) have gained popularity in recent years, particularly among professional service firms. This structure offers partners protection from personal (39) for the actions of other partners, while still allowing them to actively participate in management. LLPs combine the tax benefits of a partnership with the (40) protection similar to that of a corporation. However, partners in an LLP remain liable for their own (41) and the debts of the partnership. When forming an LLP, partners must comply with specific (42) requirements, which vary by jurisdiction.

39. A. responsibility
    B. accountability
    C. liability
    D. culpability

40. A. legal
    B. financial
    C. personal
    D. professional

41. A. mistakes
    B. errors
    C. faults
    D. misconduct

42. A. registration
    B. incorporation
    C. formation
    D. establishment

Text 4:

Joint ventures are a unique form of partnership agreement, typically formed for a specific project or limited time frame. In a joint venture, two or more entities combine their (43) , knowledge, and resources to achieve a common goal. This type of agreement allows companies to share both the (44) and the potential rewards of a business endeavor. Joint ventures can be structured in various ways, including as a separate legal entity or through a contractual arrangement. The success of a joint venture often depends on clear (45) of roles and responsibilities, as well as effective communication between the partnering entities. While joint ventures offer numerous benefits, they also come with challenges, such as potential (46) of interest and differing business cultures.

43. A. assets
    B. capital
    C. expertise
    D. properties

44. A. risks
    B. profits
    C. losses
    D. benefits

45. A. definition
    B. allocation
    C. assignment
    D. distribution

46. A. conflicts
    B. clashes
    C. disagreements
    D. disputes

Answer Key

Part 1: Incomplete Sentences

1. A
2. A
3. B
4. A
5. C
6. B
7. D
8. C
9. B
10. A
11. A
12. B
13. C
14. C
15. C
16. A
17. A
18. A
19. B
20. B
21. C
22. C
23. B
24. B
25. C
26. D
27. B
28. A
29. C
30. D

Part 2: Text Completion

31. B
32. A
33. A
34. C
35. A
36. A
37. B
38. B
39. C
40. C
41. D
42. A
43. C
44. A
45. A
46. A

This TOEIC Reading practice test focuses on types of business partnership agreements, covering key vocabulary and concepts related to various partnership structures, their characteristics, and important elements of partnership agreements. The test is designed to assess your understanding of business terminology, legal concepts, and reading comprehension skills in a business context.