Unit 1-Partnership Flashcards
What is a partnership?
A partnership is a business structure where two or more individuals share ownership and management responsibilities.
True or False: A partnership requires a formal written agreement.
False: While a formal written agreement is recommended, partnerships can exist without one.
Fill in the blank: In a general partnership, all partners share _____ and liabilities.
profits
What is the main advantage of a partnership?
The main advantage is the pooling of resources and expertise.
Multiple Choice: Which of the following is NOT a type of partnership? A) General Partnership B) Limited Partnership C) Sole Proprietorship D) Limited Liability Partnership
C) Sole Proprietorship
What defines a limited partnership?
A limited partnership has at least one general partner and one limited partner, where the limited partner’s liability is restricted to their investment.
True or False: In a limited liability partnership (LLP), partners are not personally liable for the negligence of other partners.
True
What is the purpose of a partnership agreement?
To outline the terms, responsibilities, and profit-sharing arrangements among partners.
Fill in the blank: Partners in a general partnership are jointly and _____ liable for the debts of the business.
severally
Multiple Choice: Which of the following is a disadvantage of partnerships? A) Shared decision-making B) Unlimited liability C) Greater resources D) Flexibility in management
B) Unlimited liability
What is the role of a general partner in a partnership?
A general partner manages the business and is personally liable for its debts.
True or False: A partnership can be dissolved unilaterally by any partner.
True
What happens to the profits in a partnership?
Profits are typically distributed among partners according to the terms of the partnership agreement.
Fill in the blank: Partnerships are generally taxed as _____ entities.
pass-through
What is a silent partner?
A silent partner is an individual who invests in the partnership but does not participate in management.
What is a major financial disadvantage of partnerships compared to corporations?
Partners are personally liable for business debts, risking personal assets.
True or False: In a partnership, all partners have equal decision-making power.
False
Fill in the blank: A disadvantage of partnerships is the potential for _____ among partners.
conflict
Which type of partnership can lead to limited liability for some partners?
Limited partnership
What is a disadvantage of partnerships regarding profit sharing?
Profits must be shared among partners, which can reduce individual earnings.
What is a major financial disadvantage of partnerships compared to corporations?
Partners are personally liable for business debts, risking personal assets.
True or False: In a partnership, all partners have equal decision-making power.
False
Fill in the blank: A disadvantage of partnerships is the potential for _____ among partners.
conflict
Which type of partnership can lead to limited liability for some partners?
Limited partnership
