Which of the following statements is CORRECT?
A) In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the
Business.
B) Partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership
Interests.
C) A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster
Growing company.
D) In a limited partnership, the limited partners have voting control, while the general partner has operating control over the business. Also, the limited partners are individually responsible, on a pro
Rata basis, for the firm's debts in the event of bankruptcy.
E) A major disadvantage of all partnerships relative to all corporations is the fact that income taxes must be paid by the partners rather than by the firm itself.

Question

Quizplus · Accepted Answer

Option B correctly states that partnerships have more difficulty attracting large amounts of capital compared to corporations due to factors like unlimited liability, difficulties in reorganizing after a partner's death, and illiquidity of partnership interests. The other options contain incorrect statements.

Which of the Following Statements Is CORRECT