Question

Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply.

a. Income is allocated on a pro rata basis
b. Legal arrangement between two or more people
c. Can easily raise large amounts of capital
d. Chartered by a state and is its own legal entity separate and distinct from its owners and managers
e. Taxed at individual level
f. Subject to unlimited personal liability

Answer 1

A partnership is a form of business organization where two or more people work together in owning and operating a business. The characteristics that apply to a partnership include: income is allocated on a pro rata basis, legal arrangement between two or more people, taxed at individual level, and subject to unlimited personal liability.

Step-by-step explanation:

A partnership is a form of business organization where two or more people work together in owning and operating a business. The characteristics that apply to a partnership include:

• Income is allocated on a pro rata basis: In a partnership, the partners share the profits and losses of the business based on their agreed-upon percentage of ownership.
• Legal arrangement between two or more people: Partnerships are created through a legal agreement between the partners, which outlines the rights, responsibilities, and terms of the partnership.
• Taxed at individual level: Unlike a corporation, a partnership does not pay taxes as a separate entity. Instead, each partner reports their share of the partnership's income on their personal tax return.
• Subject to unlimited personal liability: Partnerships have unlimited personal liability, which means that the partners are personally responsible for the debts and obligations of the partnership.