Which of the following is correct with respect to partnership?

Question

Quizplus · Accepted Answer

General partners in a partnership hold unlimited liability, which means they are personally responsible for any debts or obligations incurred by the partnership. This is one of the major drawbacks of partnership as a form of business entity.

Options A, B, and D are incorrect. Partnership is not a separate legal entity, meaning that the business and the partners are considered one and the same for legal and tax purposes. General partners in a partnership have unlimited liability, not limited liability. Partners are agents for each other and can bind the partnership to agreements and contracts.

Option E is also incorrect. A partnership can have both general partners and limited partners, but it is not made up of only limited partners.

Which of the Following Is Correct with Respect to Partnership