Question

. Which one of the following applies to a general partnership?A. The firm's operations must be controlled by a single partner.B. Any one of the partners can be held solely liable for all of the partnership's debt.C. The profits of the firm are taxed as a separate entity.D. Each partner's liability for the firm's debts is limited to each partner's investment in the firm.E. The profits of a general partnership are taxed the same as those of a corporation.

Answer 1

Answer:

B. Any one of the partners can be held solely liable for all of the partnership's debt.

Explanation:

In a partnership the liabilities of the partners are not limited to the share they contributed in the partnership, rather they can be individually held liable if the partnership is not able to meet the debt.

Further the taxation of profits under the partnership is based on the principle similar to sole proprietorship, as the profits are taxed in the hands of partners and not in the hands of partnership firm.

All the partners are equally liable for the operations of business, and there are types of partners, active partner, sleeping partner, etc: