Which of the following is a characteristic of a partnership? a. The partners have limited liability. b. The partnership is subject to federal income tax. c. The partnership has a limited life. d. The partnership distributes only net income to partners, but does not distribute net losses.

Question

Steve Ponce

Business

31 July, 08:13

Which of the following is a characteristic of a partnership? a. The partners have limited liability. b. The partnership is subject to federal income tax. c. The partnership has a limited life. d. The partnership distributes only net income to partners, but does not distribute net losses.

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Answers (1)

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Wade Lopez · Answer 1

The correct answer is letter "C": The partnership has a limited life.

Explanation:

A partnership is an organization with two or more members running a business. They share the profits in percentage terms in proportion to their partnership value. There are two types of partnerships: general partnerships (unlimited liability) and limited partnerships (liability proportional to the contribution to the partnership).

The partnership dissolves and a new partnership is created when one of the partners is removed, retired or deceased or even when a new partner is introduced. Thus, partnerships have a limited life.