Compared to Corporations, What Is the Primary Disadvantage of Partnerships

question 58

Multiple Choice

Compared to corporations, what is the primary disadvantage of partnerships as a form of business organization?

• A)The tax rates applied to partnerships are higher than the tax rates applied to corporations.
• B)Any dividends paid to the owners of a partnership business are taxed twice, once at the partnership level and once at the personal, or individual level.
• C)Partnerships generally are more complex to form (start up) than corporations.
• D)Partnerships have unlimited lives whereas corporations do not.
• E)The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.

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Definitions:

Lack of Ability

The absence or insufficiency of skill or power to perform tasks or actions.

Learning Environment

A setting or context designed to facilitate education and acquisition of knowledge, skills, and competencies.

Entity Mind-Set

A cognitive framework in which an individual perceives abilities and traits as fixed and unchangeable.

Incremental

Refers to something happening in small steps or stages.