Which of the following is an advantage of a partnership?
A)Partnerships are less expensive to organize than corporations.
B)The owners of a partnership are generally exempted from personal income taxes.
C)The owners who contribute an asset to the partnership retain absolute claim on the asset.
D)Partnerships have a higher cost of financial distress than those of a corporation.

Question

Quizplus · Accepted Answer

Partnerships generally have fewer legal and regulatory requirements than corporations, making them less expensive to organize.

Note: Option B is incorrect, as partners are typically subject to personal income tax on their share of the partnership's profits. Option C is incorrect, as partners contribute assets to the partnership but do not retain absolute claim over those assets once they are contributed. Option D is incorrect, as partnerships tend to have lower financial distress costs than corporations.

Which of the Following Is an Advantage of a Partnership