Question 22

Which of the following is an advantage of a partnership?

a) Partnerships have a higher cost of financial distress than those of a corporation.

b) The owners of a partnership are generally exempted from personal income taxes.

c) Partnerships are less expensive to organize than corporations.

d) The owners who contribute an asset to the partnership retain absolute claim on the asset.

Question 23

Which of the following is true of limited partners in a limited partnership?

a)They assume the same operational duties as that of the general partner.

b) They have limited liability for the debts of the business but their potential for profits is unlimited.

c) They have to assume liability beyond their contribution in the business in the event of a bankruptcy.

d) They usually have first claim to profits and losses made by the business.