BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Are not personally liable for the debts
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Have limited personal liability
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Must convert the partnership to a joint venture
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Must use their personal assets to meet the debts
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Detailed explanation-1: -If the LLP can’t pay its debts, it is solely responsible for those debts and not its partners. If one partner incurs a debt, the other partners are not responsible for paying it off. This can be beneficial in protecting personal assets, as the partners cannot be held liable for any debts incurred by another partner.
Detailed explanation-2: -When a partnership (or a sole proprietorship) cannot pay its debts with business assets, the partners (or the proprietor) must use personal assets to meet the debt. Any asset-cash, merchandise inventory, computers, and so on that a partner contributes to the partnership becomes the property of the partnership.
Detailed explanation-3: -Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner.
Detailed explanation-4: -In a general partnership: all partners (called general partners) are personally liable for all business debts, including court judgments. each individual partner can be sued for the full amount of any business debt (though that partner can, in turn, sue the other partners for their share of the debt), and.
Detailed explanation-5: -In a general partnership, all partners have independent power to bind the business to contracts and loans. Each partner also has a total liability, meaning they are personally responsible for all of the business’s debts and legal obligations.