Multiple Choice
Which of the following organizational forms provides its owners with limited liability?
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1. Introduction to Accounting
Business Organization
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Which of the following is NOT an advantage of a partnership?
A
Unlimited liability for partners
B
Direct control by owners
C
Combined skills and resources
D
Ease of formation
Verified step by step guidance1
Step 1: Understand the concept of a partnership. A partnership is a business structure where two or more individuals share ownership, responsibilities, and profits. It is important to know the advantages and disadvantages of this structure.
Step 2: Review the advantages of a partnership. Common advantages include direct control by owners, combined skills and resources, and ease of formation. These are typically considered benefits of partnerships.
Step 3: Analyze the concept of unlimited liability. Unlimited liability means that partners are personally responsible for the debts and obligations of the business. This is generally considered a disadvantage of partnerships.
Step 4: Compare the options provided in the question. Identify which of the listed items does not align with the advantages of a partnership. Unlimited liability is a disadvantage, while the other options (direct control, combined skills, and ease of formation) are advantages.
Step 5: Conclude that the correct answer is 'Unlimited liability for partners,' as it is not an advantage of a partnership but rather a disadvantage.
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