Final answer:
The true statement about the division of profits and losses in a partnership is that if a partnership agreement exists, partners can distribute profits and losses however they agree upon. General partnerships involve shared responsibility and liability, while a limited liability partnership protects personal assets.
Step-by-step explanation:
The statement that is true about the division of profits and losses in a partnership is: (b) If a written partnership agreement exists, partners have the right to distribute profits and losses in any way to which they agree.
This means that while a general partnership may bring certain disadvantages, such as personal liability for all business debts and the effect of a partner's actions on others, it also offers flexibility in terms of profit and loss distribution if clearly stated in the partnership agreement. Partners may define specific terms for profit and loss sharing which may differ from equal division or the default rules provided by the Uniform Partnership Act.
General partnerships allow multiple owners to share in the responsibility of running the business and its profits, but conversely, they must also share in any losses and liabilities. In contrast, a limited liability partnership limits partners' liability to their investment, protecting personal assets from business failure.
Partnerships have distinct characteristics, such as being easy to establish, the ability to attract investors, and no special taxes. However, each partner's personal liability could result being responsible for the actions of their co-owners unless the risks are mitigated through a limited liability structure or explicit agreements.