Final answer:
A partnership where partners divide profits and management responsibilities and share unlimited personal liability is called a general partnership, which exposes partners to potential personal asset risk.
Step-by-step explanation:
A partnership in which the partners divide profits and management responsibilities and share unlimited personal liability for the partnership's debts is called a general partnership. This business structure involves two or more people who not only share in the responsibility of running the business but also share the business's profits and losses. Unfortunately, a key disadvantage is that partners are liable for each other's actions, and personal assets might be at risk if the business incurs debt or gets sued.
In contrast, a limited partnership includes both general and limited partners, where the limited partners typically have no management powers and are only liable for their investment in the business. The limited liability provided by a limited liability partnership (LLP) protects partners from losing personal assets beyond their investment in the company, which is not the case with a general partnership.
A corporation or limited liability company (LLC), on the other hand, offers limited liability to its owners but involves a different set of regulation, management structures, and tax implications.