Suppose that Tracy and Pat start a business. Because of a series of bad decisions by Tracy, the company goes bankrupt, owing a total of $50,000. Tracy is penniless and Pat is a millionaire. If the company were organized as a partnership, Pat would be responsible for
A) over $1 million of debt.
B) $50,000 of debt.
C) $25,000 of debt.
D) $0 of debt.

Question

Quizplus · Accepted Answer

In a partnership, all partners are personally liable for the debts of the business. Therefore, Pat would be responsible for the entire $50,000 debt since Tracy is penniless.

Suppose That Tracy and Pat Start a Business