Question

Which of the following is an advantage of a general partnership when compared to a corporation?

a.Creditors to a partnership cannot attach personal assets of partners.

b.A partnership is more likely to have a positive net income.

c.The partnership usually hires professional managers.

d.The partnership is relatively inexpensive to organize.

Answer 1

The correct answer is OPTION D. i.e The partnership is relatively inexpensive to organize. OR

An advantage of a general partnership when compared to a corporation is that the partnership is relatively inexpensive to organize.

Explanation

Partnership is a collaboration of two more people to work together and form of firm which will work for the partners and according to the partners. Partnership involves partnership deed which contain all the rules and regulations of the firm and the ratio of profits and losses shared by the partners.

There are various points about the partnership :

• Creditors to the partnership can attach personal assets of the partners.
• It is not always true that partnership is more likely to have a positive net income.
• Partnership usually do not has professional managers.

All the above points of the partnerships as compared to a corporation are similar.

But a point which can be advantage of a General partnership when compared to corporation is that : the partnership is relatively inexpensive to organise.
This is because partnership is a colloberation of two or more people and its organisation may require less funding as compared to corporations.

Corporations are much expensive to organise as these requires huge investments and fundings.