Which of the following is a characteristic of general partnerships?
A) The partners have limited liability.
B) The partners have the potential for conflict.
C) One person is the owner of a general partnership.
D) Each partner has different rights when representing the partnerships.
B) The partners have the potential for conflict.
The characteristic of general partnerships is B) The partners have the potential for conflict.
The correct answer is B) The partners have the potential for conflict.
To arrive at this answer, we can analyze the characteristics of general partnerships:
A) The partners have limited liability: This statement is incorrect. In a general partnership, the partners have unlimited liability, meaning they are personally responsible for the debts and obligations of the partnership.
B) The partners have the potential for conflict: This statement is correct. General partnerships involve two or more individuals sharing the profits, risks, and management of a business. With multiple partners involved, differences in opinions, decision-making, and other factors can potentially lead to conflicts.
C) One person is the owner of a general partnership: This statement is incorrect. General partnerships are owned and operated by two or more individuals, known as partners. Each partner actively participates in the management and decision-making of the partnership.
D) Each partner has different rights when representing the partnership: This statement is incorrect. In a general partnership, partners typically have equal rights, including representation of the partnership, unless specifically stated otherwise in the partnership agreement.
Therefore, the correct characteristic of general partnerships is B) The partners have the potential for conflict.