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4) Partnerships have difficulty attracting capital in part because of their
unlimited liability, the lack of impermanence of the organization, and
difficulty in transferring ownership
5) A major disadvantage of a partnership relative to a corporation as a
form of business organization is the high cost and practical difficulty of
its formation
Question 8
Which of the following statements is CORRECT?
1) In a regular partnership, liability for other partners' misdeeds is
limited to the amount of a particular partner's investment in the business
2) Partnerships have more difficulty attracting large amounts of capital
than corporations because of such factors as unlimited liability, the need
to reorganize when a partner dies, and the illiquidity (difficulty buying
and selling) of partnership interests
3) A slow-growth company, with little need for new capital, would be
more likely to organize as a corporation than would a faster growing
company
4) In a limited partnership, the limited partners have voting control,
while the general partner has operating control over the business. Also,
the limited partners are individually responsible, on a pro rata basis, for
the firm's debts in the event of bankruptcy.