Question: What is the main disadvantage of a partnership?
Options:
Limited capital
Shared profits
Complexity in decision-making
Unlimited liability
Correct Answer: Unlimited liability
Solution:
Partners in a partnership typically face unlimited liability, meaning they are personally responsible for business debts.
What is the main disadvantage of a partnership?
Practice Questions
Q1
What is the main disadvantage of a partnership?
Limited capital
Shared profits
Complexity in decision-making
Unlimited liability
Questions & Step-by-Step Solutions
What is the main disadvantage of a partnership?
Step 1: Understand what a partnership is. A partnership is a business structure where two or more people share ownership.
Step 2: Learn about liability. Liability means being responsible for something, especially debts.
Step 3: Know what unlimited liability means. In a partnership, if the business owes money, the partners can be held personally responsible for that debt.
Step 4: Realize the risk. This means that if the business cannot pay its debts, the partners might have to use their personal money or assets to pay them off.
Step 5: Conclude that the main disadvantage of a partnership is this risk of unlimited liability.
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