Indicate what is the difference between a general partnership and a limited liability company and when might each type of entity be used by completing the table below. Classify each characteristic as belonging to a "General partnership", a "Limited liability company", or both a "General partnership and limited liability company". Characteristic belongs to ...a.Partners are considered members b.Permitted to participate in management of the entity c.Creditors collect from both partnership assets and partners. d.The partners have unlimited liability for the entity's debt. e.Absent a personal guarantee, no liability for the entity's debt. f.Usually used for corporate joint ventures where the corporate partners are established with limited assets.

Under general partnership, partners have unlimited liability for the partnership business and they…

Answered: Indicate what is the difference between…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Indicate what is the difference between a general partnership and a limited liability company and when might each type of entity be used by completing the table below. Classify each characteristic as belonging to a "General partnership", a "Limited liability company", or both a "General partnership and limited liability company".

		Characteristic belongs to ...
a.	Partners are considered members
b.	Permitted to participate in management of the entity
c.	Creditors collect from both partnership assets and partners.
d.	The partners have unlimited liability for the entity's debt.
e.	Absent a personal guarantee, no liability for the entity's debt.
f.	Usually used for corporate joint ventures where the corporate partners are established with limited assets.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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