Which of the Following Is a Reason to Use a Partnership

question 33

Multiple Choice

Which of the following is a reason to use a partnership as the legal form of a business?

• A)Partnerships avoid the issue of mutual agency.
• B)Partnerships avoid the issue of unlimited liability.
• C)Partnerships avoid the issue of double-taxation faced by corporations.
• D)Partnerships avoid the difficulty of raising capital.

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Definitions:

DOL

Department of Labor, a U.S. government department responsible for occupational safety, wage standards, unemployment insurance benefits, re-employment services, and some economic statistics.

Financial Leverage

The use of debt to increase the potential return of an investment.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree to which fixed costs affect profitability.

Sales Revenue

The total amount of money received by a company from its sales of goods or services before any expenses are subtracted.