Question

All of the following are advantages of partnerships except one. Which is the exception?A. they are relatively easy to start B. their profits are taxed once as personal income C. their liability is limited by each partner's share of the business D. a greater opportunity for specialization by the owners E. a continuation of the firm if one partner dies

Answer 1

Answer: Option C

Explanation: As per the rules of business law, only a limited partner in a partnership arrangement has limited liability all other partners such as the general partner have unlimited liability to the debt of the entity.

A general partner can be held personally liable for the debts of the entity and his personal assets can be taken into consideration in case of any default by the entity.

In the eyes of law, in partnership arrangement the owner and the entity are not two separate legal entities.