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Partnership Characteristics Quiz

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Questions and Answers

What happens to a partnership when a partner withdraws?

The partnership automatically ends.

Dissolution occurs, but the business may continue. (correct)

The assets are divided among the remaining partners.

The remaining partners must start a new business.

What does unlimited liability mean for partners in a partnership?

Partners have limited responsibility for business debts.

Partners' personal assets are protected from business liabilities.

Partners can only lose the amount they invested.

Each partner is personally liable for all debts of the partnership. (correct)

Which of the following accurately describes the concept of limited life in partnerships?

Partnerships automatically renew after a certain period.

The partnership's existence is unaffected by the addition of new partners.

The partnership can live indefinitely regardless of any partner's status.

A partnership can dissolve if any partner withdraws or a new partner is admitted. (correct)

Which statement is true about the dissolution of a partnership?

<p>Dissolution does not necessarily mean the business ceases to operate.</p> Signup and view all the answers

What is NOT a characteristic of a partnership form of business organization?

<p>Partnerships can exist independently of partners.</p> Signup and view all the answers

Study Notes

Partnership Characteristics

Limited Life: Partnerships dissolve when a partner leaves or a new partner joins. Dissolution does not necessarily mean the business closes, it only means the existing partnership ends.
Unlimited Liability: Each partner is personally responsible for all the partnership's debts. This means creditors can pursue individual partners for the full amount of the debt, even if the partnership itself cannot pay.

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Description

Test your understanding of the key characteristics of partnerships, including limited life and unlimited liability. This quiz will help you grasp the implications these features have on individual partners and the partnership as a whole.