GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Contracts are needed to start the businesses
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Owners have complete control of the business.
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Owners have limited legal liability.
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The businesses are owned by one person.
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Detailed explanation-1: -Unlike other business entities like private limited companies, sole proprietorship and partnership companies render unlimited liabilities to the members.
Detailed explanation-2: -Partnership Liability – As with a sole proprietorship, the lack of personal liability protection is considered by many people to be the biggest drawback of operating as a general partnership. Moreover, all general partners are liable for any acts, legal wrongdoing, or debts incurred by any of the business partners.
Detailed explanation-3: -Partnerships can be very similar to Sole Proprietorships in the sense that the business is not necessarily an independent entity; in the simplest form of Partnership, all partners contribute capital and all are fully liable for business debts.
Detailed explanation-4: -Unlimited liability typically exists in general partnerships and sole proprietorships.