What is a key disadvantage of a general partnership?
Practice Questions
Q1
What is a key disadvantage of a general partnership?
Limited access to capital
Unlimited liability for partners
Difficulty in decision-making
Lack of business continuity
Questions & Step-by-Step Solutions
What is a key disadvantage of a general partnership?
Step 1: Understand what a general partnership is. It is a business structure where two or more people share ownership and management.
Step 2: Learn about liability. Liability means being responsible for something, especially debts.
Step 3: In a general partnership, all partners share the responsibility for the business's debts.
Step 4: Know what unlimited liability means. It means that if the business owes money, the partners can lose their personal assets, like their house or savings, to pay off those debts.
Step 5: Realize that this is a key disadvantage because it puts personal finances at risk.
