Which of the following statements best describes partnerships?
A) In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business.
B) Partnerships have trouble attracting large capital due to such factors as unlimited liability, and the illiquidity of partnership interests.
C) A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster-growing company.
D) A major disadvantage of all partnerships relative to all corporations is the fact that taxes must be paid by the partners rather than by the firm itself.

Question

Quizplus · Accepted Answer

Partnerships have unlimited liability, meaning that partners are personally responsible for any debts or legal issues the business may face. This can make it difficult to attract large capital investments, as potential investors may be wary of assuming personal liability. Additionally, partnership interests are often illiquid, meaning they cannot be easily bought or sold, which can also limit access to capital. Option A is incorrect as in a general partnership, partners are jointly and severally liable for the business's misdeeds. Option C may be true in some cases, but it is not directly related to partnerships. Option D is incorrect as both partnerships and corporations have their own tax structures and considerations.

Which of the Following Statements Best Describes Partnerships