Greg and Todd form a partnership and start a business in which each has a 50 percent share of the profit. After a year, the firm goes bankrupt and has debts of $20,000. Greg has no money, but Todd has $25,000 in the bank. Todd must pay ________ of debt.
A) $0 because in a partnership each partner must pay the same
B) $0 because partners in a partnership have limited liability
C) half, or $10,000
D) $20,000

Question

Quizplus · Accepted Answer

In a partnership, partners have unlimited liability, meaning they are personally responsible for the debts of the business. Since Greg has no money, Todd must cover the entire debt of $20,000.

Greg and Todd Form a Partnership and Start a Business