Multiple Choice
Which of the following is considered a positive internal factor controlled within a business organization?
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1. Introduction to Accounting
Business Organization
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Which two features best characterize a general partnership?
A
Centralized management and limited life
B
Limited liability and perpetual existence
C
Mutual agency and unlimited liability
D
Transferable ownership and double taxation
Verified step by step guidance1
Understand the concept of a general partnership: A general partnership is a business structure where two or more individuals agree to share profits, losses, and management responsibilities. It is not a separate legal entity from its owners.
Identify the key features of a general partnership: The two defining characteristics are mutual agency and unlimited liability. Mutual agency means that each partner can act on behalf of the partnership, binding the business to contracts and obligations. Unlimited liability means that partners are personally responsible for the debts and obligations of the partnership.
Eliminate incorrect options: Centralized management and limited life are features of other business structures, such as sole proprietorships. Limited liability and perpetual existence are characteristics of corporations, not general partnerships. Transferable ownership and double taxation are also features of corporations.
Focus on the correct answer: Mutual agency and unlimited liability are unique to general partnerships and distinguish them from other business structures.
Conclude: The correct answer is mutual agency and unlimited liability, as these are the two features that best characterize a general partnership.
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