Question

What is a partnership's primary flaw, as a legal structure for conducting business?

1.
The owners have unlimited liability, in that personal wealth can be taken to satisfy debts.

2.
The owners lack secrecy because regulations require firms to disclose financial results.

3.
The owners, who are limited partners, have limited liability and cannot lose more than they invested.

4.
The owners, who are general partners, have unlimited liability and may have to cover the debts.

Answer 1

4

Step-by-step explanation:

The primary flaw of partnership as a legal structure for conducting business is that the owners who are general partners have unlimited liability and may have to cover the debts. This means that the personal assets of the general partners can be seized to pay off any debts or legal obligations of the partnership, even if it exceeds the amount of money that they invested in the business. This can put the general partners at significant financial risk and make it difficult to attract new partners to the business.