Which of the Following Statements Regarding a Partnership Is True

question 97

Multiple Choice

Which of the following statements regarding a partnership is true?

• A) A partnership is an involuntary association.
• B) To be valid, a partnership must have a written partnership agreement.
• C) A partnership is a separate tax-paying entity for federal tax purposes.
• D) Partners in a partnership have personal liability much like that of sole proprietors, in the sense that partners and sole proprietors have personal liability for business debts and other legal obligations of the business.
• E) All of the partners in a partnership have limited liability.

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Definitions:

Amortized Mortgage

A loan where the principal is paid down over the life of the loan, typically through fixed monthly payments.

Nominal Interest Rate

The rate of interest before adjustments for inflation, reflecting the rate at which money can be borrowed or lent.

Monthly Payments

Regular payments made on a monthly basis towards settling a financial obligation, such as a loan or mortgage.

Effective Annual Rate

The effective annual rate is the interest rate on a financial product restated from the nominal rate as an annual rate that takes into account compounding over a given period.