Which of the following is a common reason for partners to enter into a partnersh

Practice Questions

Q1
Which of the following is a common reason for partners to enter into a partnership?
  1. To avoid paying taxes
  2. To share risks and responsibilities
  3. To limit their business exposure
  4. To eliminate competition

Questions & Step-by-Step Solutions

Which of the following is a common reason for partners to enter into a partnership?
  • Step 1: Understand what a partnership is. A partnership is when two or more people work together in a business.
  • Step 2: Think about the challenges of running a business. These can include financial risks, workload, and decision-making.
  • Step 3: Realize that by partnering, individuals can share these challenges. This means they can help each other out.
  • Step 4: Recognize that sharing risks means that if something goes wrong, the burden is not on one person alone.
  • Step 5: Conclude that one common reason for entering a partnership is to share the risks and responsibilities of the business.
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