Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Ontario.They operated the business as a general partnership.After 11 months the business went broke and Jamie and Maria were left with outstanding bills of $37,500,which is more than their investment in the company.Jamie and Maria can:
A)lose only the funds they originally invested in their company.
B)lose their personal assets as the result of their company's financial problems.
C)lose only the total value of the assets actually used to operate the business.
D)avoid any liability for these debts since a partnership is considered to be a business entity that is separate and distinct from the partners who own it.

Question

Quizplus · Accepted Answer

In a general partnership, the partners have unlimited liability for the debts and obligations of the business, meaning that their personal assets are at risk if the business fails to pay its debts. Therefore, Jamie and Maria may be forced to sell their personal assets to cover the outstanding bills of $37,500, which is more than their investment in the company. Option A and C are incorrect because the partners' liability is not limited to their initial investment or the assets used to operate the business. Option D is incorrect because partnerships are not considered separate legal entities from their owners.

Jamie and Maria Invested All Their Savings in a Small