Question

How does a general partnership differ from a limited partnership?

1) The liability of partners
2) The number of partners
3) The duration of the partnership
4) The capital contribution of partners

Answer 1

A general partnership and a limited partnership differ in terms of liability, number of partners, duration, and capital contribution.

Step-by-step explanation:

A general partnership and a limited partnership differ in the following ways:

1. The liability of partners: In a general partnership, all partners have unlimited liability for the business's debts and obligations. This means that their personal assets can be used to satisfy any debts. In a limited partnership, there are both general partners (who have unlimited liability) and limited partners (who have limited liability). Limited partners are only liable for the amount of their capital contribution.
2. The number of partners: A general partnership requires at least two partners, while a limited partnership requires at least one general partner and one limited partner.
3. The duration of the partnership: A general partnership and a limited partnership can both exist for an indefinite period of time. However, a limited partnership may have provisions in the partnership agreement that specify a limited duration.
4. The capital contribution of partners: In a general partnership, partners contribute capital to the business in equal or agreed-upon proportions. In a limited partnership, general partners must contribute capital, but limited partners may or may not contribute capital.