Which of the following are disadvantages of a partnership?
I.limited life of the firm
II.personal liability for firm debt
III.greater ability to raise capital than a sole proprietorship
IV.lack of ability to transfer partnership interest
A)I and II only
B)III and IV only
C)II and III only
D)I, II, and IV only
E)I, III, and IV only

Question

Quizplus · Accepted Answer

I. Limited life of the firm - Partnerships have limited life as they dissolve when one partner leaves, dies, or retires from the business.

II. Personal liability for firm debt - Partners are personally liable for the debts and legal obligations of the firm, even if it means using personal assets to pay off the debt.

III. Greater ability to raise capital than a sole proprietorship - This is not a disadvantage; it is actually an advantage of a partnership as more partners mean more capital injection.

IV. Lack of ability to transfer partnership interest - Partnerships have restricted transferability of ownership interest as they require the unanimous consent of all existing partners.

Which of the Following Are Disadvantages of a Partnership