Question

Which of the following is not a characteristic of a general partnership?
a)the partnership is created by a contract
b)mutual agency
c)partners share equally in net income or net losses unless an agreement states differently
d)dissolution occurs only when all partners agree

Answer 1

Concepts and reason

Business forms: A business form of organization has many options. It can be in the form of sole proprietorship, partnership, S Corporations, or C Corporations. They are basically differed by the amount of capital that is possible from the business organization, liability of owners, and legal status.

Fundamentals

Partnership: Partnerships are not taxpaying entities. Partnership activities are reported on form 1065. Partnership reports ordinary business income or loss and separately reported items on form 1065. Partners pay taxes on their share of business income and separately stated items. Each partner receives schedule K-1 showing their share of partnership ordinary business income or loss and separately reported items. It is created by a contract between partners and each partner is severally and individually responsible for partnership losses.

Partnership is created by a contract between partners. It is a characteristic of a general partnership. Partnership is a mutual agency. Partners are agents of partnership. Partners share income and losses of partnership equally unless otherwise stated in the partnership agreement.

Dissolution of partnership does not require consent of all the partners. Death, retirement, or admission of partner results in dissolution of partnership.

Ans:

Dissolution occurs only when all partners agree is not a characteristic of a partnership.