Mastering TOEIC Reading: Interpreting Partnership Dissolution Terms

TOEIC Reading Practice Test: Partnerships and Dissolutions

Part 1: Incomplete Sentences

1. The partners agreed to ____ the terms of their business arrangement annually.
   A) review
   B) revise
   C) renew
   D) recycle

2. Any ____ to the partnership agreement must be made in writing and signed by all parties.
   A) amendments
   B) appendices
   C) additions
   D) alterations

3. The ____ of profits and losses shall be determined according to each partner’s ownership percentage.
   A) distribution
   B) division
   C) dispersion
   D) dissolution

4. In the event of a partner’s death, the surviving partners have the option to ____ the deceased partner’s share.
   A) acquire
   B) attain
   C) achieve
   D) accrue

5. The partnership shall be ____ upon the mutual agreement of all partners or by court order.
   A) dissolved
   B) dissipated
   C) dismissed
   D) disintegrated

6. Each partner is jointly and ____ liable for the debts and obligations of the partnership.
   A) severally
   B) severely
   C) separately
   D) sequentially

7. The ____ partner shall have the authority to make day-to-day business decisions without consulting others.
   A) managing
   B) managerial
   C) manipulative
   D) mandatory

8. Any partner wishing to ____ from the partnership must provide written notice 90 days in advance.
   A) withdraw
   B) retreat
   C) retire
   D) resign

9. The partnership’s ____ assets shall be distributed to the partners in proportion to their capital contributions.
   A) remaining
   B) residual
   C) remnant
   D) reserved

10. In case of a dispute, partners agree to seek ____ before resorting to legal action.
    A) mediation
    B) arbitration
    C) negotiation
    D) reconciliation

11. The ____ of intellectual property created during the partnership shall be jointly owned by all partners.
    A) rights
    B) royalties
    C) revenues
    D) responsibilities

12. Partners must act in good faith and with ____ loyalty to the partnership and each other.
    A) utmost
    B) ultimate
    C) unequivocal
    D) unassailable

13. Any partner found to be in ____ of the partnership agreement may be subject to expulsion.
    A) breach
    B) violation
    C) infringement
    D) contravention

14. The partnership shall maintain proper books of account and financial ____ at its principal place of business.
    A) records
    B) reports
    C) registers
    D) receipts

15. Each partner’s ____ to the partnership’s capital shall be clearly documented in the agreement.
    A) contribution
    B) commitment
    C) compliance
    D) concession

16. The ____ of any partner shall not cause the automatic dissolution of the partnership.
    A) bankruptcy
    B) insolvency
    C) liquidation
    D) foreclosure

17. Partners must disclose any potential ____ of interest that may affect the partnership’s operations.
    A) conflicts
    B) clashes
    C) collisions
    D) contradictions

18. The partnership agreement outlines the ____ for admitting new partners to the business.
    A) procedure
    B) protocol
    C) process
    D) policy

19. Any ____ against the partnership must be defended by all partners collectively.
    A) lawsuit
    B) litigation
    C) legal action
    D) prosecution

20. The ____ of partnership assets upon dissolution shall be conducted in a fair and equitable manner.
    A) distribution
    B) allocation
    C) apportionment
    D) assignment

21. Partners are entitled to reasonable ____ for services rendered to the partnership beyond their normal duties.
    A) compensation
    B) remuneration
    C) reimbursement
    D) reparation

22. The partnership’s ____ year shall begin on January 1st and end on December 31st of each calendar year.
    A) fiscal
    B) financial
    C) accounting
    D) annual

23. Any ____ of confidential information by a partner may result in severe penalties as outlined in the agreement.
    A) disclosure
    B) divulgence
    C) dissemination
    D) declaration

24. The partnership shall ____ adequate insurance coverage to protect against potential liabilities.
    A) maintain
    B) sustain
    C) retain
    D) preserve

25. Partners must obtain unanimous consent before ____ any major assets of the partnership.
    A) disposing
    B) selling
    C) transferring
    D) relinquishing

26. The ____ of the partnership’s name and goodwill shall be determined by mutual agreement upon dissolution.
    A) valuation
    B) assessment
    C) appraisal
    D) estimation

27. Any partner may call for a meeting to discuss the ____ of the partnership at any time with proper notice.
    A) affairs
    B) matters
    C) issues
    D) concerns

28. The partnership agreement shall be ____ by the laws of the state in which the business is primarily conducted.
    A) governed
    B) regulated
    C) controlled
    D) administered

29. Partners must act with ____ care in managing the affairs of the partnership.
    A) due
    B) proper
    C) reasonable
    D) adequate

30. The ____ of the partnership shall be completed within six months of the decision to dissolve, unless otherwise agreed.
    A) winding up
    B) termination
    C) closure
    D) finalization

Interpreting partnership dissolution terms

Part 2: Text Completion

Text 1:

The process of dissolving a partnership requires careful (31) of the terms outlined in the partnership agreement. Partners must first agree on the (32) for dissolution, which may include mutual consent, achievement of partnership goals, or irreconcilable differences. Once the decision to dissolve is made, partners must follow a systematic (33) to wind up the partnership’s affairs. This includes settling all outstanding debts, collecting receivables, and (34) any remaining assets among the partners according to their ownership stakes.

31. A) interpretation
    B) interpolation
    C) interrogation
    D) intervention

32. A) reasons
    B) excuses
    C) justifications
    D) explanations

33. A) approach
    B) method
    C) technique
    D) strategy

34. A) distributing
    B) dividing
    C) dispersing
    D) disseminating

Text 2:

During the dissolution process, it is crucial for partners to maintain clear (35) to avoid misunderstandings and potential disputes. All decisions regarding the (36) of partnership assets and liabilities should be documented in writing and agreed upon by all parties involved. Partners must also consider any (37) obligations, such as lease agreements or ongoing contracts, that may affect the dissolution timeline. It is often advisable to seek the assistance of a legal professional to ensure that all aspects of the dissolution are handled in compliance with relevant (38) and regulations.

35. A) communication
    B) conversation
    C) dialogue
    D) discussion

36. A) disposition
    B) disposal
    C) disbursement
    D) divestment

37. A) ongoing
    B) continuous
    C) persistent
    D) enduring

38. A) laws
    B) statutes
    C) ordinances
    D) decrees

Text 3:

The (39) of partnership assets can be a complex process, especially when dealing with intangible assets such as intellectual property or goodwill. Partners must agree on a fair method of (40) these assets, which may involve hiring independent appraisers. In some cases, partners may choose to (41) certain assets rather than liquidate them, particularly if there is potential for future value. It is important to address any outstanding loans or personal guarantees made by individual partners on behalf of the partnership, ensuring that these obligations are either satisfied or (42) in an equitable manner.

39. A) valuation
    B) evaluation
    C) assessment
    D) estimation

40. A) valuing
    B) pricing
    C) rating
    D) judging

41. A) retain
    B) maintain
    C) preserve
    D) conserve

42. A) reallocated
    B) reassigned
    C) redistributed
    D) rearranged

Text 4:

Once all partnership affairs have been settled, the final step in the dissolution process is to file the necessary (43) with relevant government agencies to formally terminate the partnership. This typically includes submitting dissolution papers to the state where the partnership was registered and notifying the Internal Revenue Service. Partners should also inform all (44), suppliers, and business associates of the partnership’s dissolution to ensure proper closure of all business relationships. After dissolution, former partners may be subject to certain (45) periods during which they remain liable for partnership debts or claims. It is crucial to understand these ongoing responsibilities and to maintain accurate records for the prescribed (46) period following the partnership’s dissolution.

43. A) documentation
    B) paperwork
    C) forms
    D) certificates

44. A) clients
    B) customers
    C) patrons
    D) consumers

45. A) statutory
    B) mandatory
    C) obligatory
    D) compulsory

46. A) retention
    B) preservation
    C) conservation
    D) maintenance

Partnership dissolution process flowchart

Answer Key

Part 1: Incomplete Sentences

1. A) review
2. A) amendments
3. A) distribution
4. A) acquire
5. A) dissolved
6. A) severally
7. A) managing
8. A) withdraw
9. B) residual
10. B) arbitration
11. A) rights
12. A) utmost
13. A) breach
14. A) records
15. A) contribution
16. A) bankruptcy
17. A) conflicts
18. A) procedure
19. A) lawsuit
20. C) apportionment
21. B) remuneration
22. A) fiscal
23. A) disclosure
24. A) maintain
25. C) transferring
26. A) valuation
27. A) affairs
28. A) governed
29. A) due
30. A) winding up

Part 2: Text Completion

31. A) interpretation
32. A) reasons
33. A) approach
34. A) distributing
35. A) communication
36. B) disposal
37. A) ongoing
38. A) laws
39. A) valuation
40. A) valuing
41. A) retain
42. C) redistributed
43. A) documentation
44. B) customers
45. A) statutory
46. A) retention

This comprehensive TOEIC Reading practice test focuses on the interpretation of partnership dissolution terms, providing candidates with valuable experience in tackling questions related to business partnerships and their termination. The test covers a wide range of vocabulary and concepts commonly encountered in legal and business contexts, helping test-takers improve their understanding of complex contractual language and partnership dynamics.