Firm: Sole Proprietorship vs Partnership

Which of the following is an advantage of general partnership over sole proprietorship?

• The owners enjoy limited liability.

• The risk of running the business is lower.

• has a wider source of capital.

• There is no need to disclose its financial accounts to the public.

John, Andy and Sammi form a general partnership. Which of the following is true?

• They share profits equally.

• They can transfer their ownership freely without the consent of other partners.

• They have to bear unlimited liability.

• They have to disclose the financial conditions of the partnership.   

Mr Wong and Mr Chan have formed a partnership. Which of the following statements is correct?

• They enjoy limited liability.

• The transfer of ownership does not need the other partner’s consent.

• Each of them is responsible for the business decisions of the other.

• The accounts of the partnership have to be disclosed to the public.

Mr. Lee, a sole proprietor, expands his business by forming a general partnership with Mr. Chan. As a result,

• their liability to the firm is confined to their investment in the firm.

• they have to share profits equally.

• each of them has to be responsible for the business decisions of his partner.

• they can issue shares to raise capital.

Partnership __________ than sole proprietorship.

• has more capital

• is a less risky type of ownership

• has less flexibility in decision making

• enjoys more economies of scale