Question

2. Romy & Colette are sisters who love cycling. They decided to create a business together Mountain, Road, Tandem and Children’s bicycles. Romy & Colette will equally share in the decision making and in the profits or losses. Which type of business did they make if they both have full personal liability for the firm's debts? A. Sole proprietorship B. Limited partnership C. Corporation D. Joint stock company E. General partnership

Answer 1

Answer: general partnership

Explanation: In a general partnership the owner and the firm are not considered separate legal entities . In such a structure the partners of the firm will be held personally liable for all the debts of the firm. In case of default the property of owners could be taken into consideration in general partnership structure.

Both joint stock company and corporation have limited limited liability feature and sole proprietorship have only one owner.

Hence the correct answer is E.