Question

Compared to a sole proprietorship, an advantage of a general partnership is that it is: a. likely to have a stronger financial base. b. able to completely avoid the problem associated with unlimited liability. c. considered to be a permanent business organization. d. easier and less expensive to form.

Answer 1

Answer: Compared to a sole proprietorship, an advantage of a general partnership is that it is: "b. able to completely avoid the problem associated with unlimited liability."

Explanation: The advantage of the sole proprietorship is its simplicity since it is a company in which the owner is a sole proprietor.

But the great disadvantage of this type of company is that the owner of a sole proprietorship is always responsible for all the debts of the business, therefore if the business is in poor financial condition, creditors will demand the payment of their credits and the owner responds with own money,instead in general partnership the liability is limited to the capital contributed.