Question

Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills in order to open up and run a coffee shop. They will share any profits or losses that the business generates and will be personally responsible for making good on any debt that their business undertakes. a) Partnership b)corporation c) Sole poipertation d) None of above

Answer 1

B : Partnership

EXPLANATION :

A group of people (less than 10 in banking, less than 20 in other) carrying on a business together, deciding to share profits or losses in a proportion (based on a contract) , mutual agency (one partners' act effecting other) , unlimited liability of partners towards outsiders (except for special limited liability partnership) .

All these characteristics are satisfied by venture of Franklin , John , Harry & Henry.

Sole Proprietorship is a business owned , run & managed by a single owner. Corporate / Company is seperate legal entity from its owners (big group than partnership) ,owners don't have unlimited liability . So Franklin , John , Hary , Henry firm is not case for either one .