Partnership Quiz

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Questions and Answers

What is a fundamental characteristic of a partnership?

  • Owned by two or more individuals (correct)
  • Owned solely by one individual
  • Beneficial for only one partner
  • Requires a formal contract to begin

Which of the following is an advantage of forming a partnership?

  • Higher capital due to multiple contributions (correct)
  • Limited decision-making authority
  • Mandatory formal meetings are required
  • Unrestricted personal liability

What is one significant disadvantage of a partnership?

  • Shared responsibility for decision-making
  • Individual recognition in profits
  • Limited access to funding sources
  • A partner can be held liable for another's actions (correct)

How are profits typically handled in a partnership?

<p>Divided based on an agreed formula (A)</p> Signup and view all the answers

What can significantly undermine a partnership's success?

<p>Lack of shared goals among partners (D)</p> Signup and view all the answers

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Study Notes

Partnership Overview

  • A partnership is owned by two or more individuals, known as partners.
  • Profits from the partnership are distributed among partners according to a pre-agreed arrangement.

Advantages of Partnership

  • Increased capital availability due to combined contributions from multiple partners.
  • Easier management and operations similar to a sole proprietorship, allowing for streamlined decision-making.

Disadvantages of Partnership

  • Profit sharing can lead to reduced individual income, as profits are split among partners.
  • Misunderstandings or conflicts can jeopardize negotiations and overall partnership effectiveness.
  • Partners may be held liable for the actions and decisions of other partners, potentially risking personal assets.

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