Question

Which business is the best example of a limited partnership?

1.Ethan operates a television repair shop and is personally liable for the debts of the business. Kevin gave Ethan $50,000 to open the business and now shares in the profits with him. Kevin will only be liable up to his $50,000 if the business fails.

2.Harold owns and operates a furniture store and is personally liable for the debts of the business. Harvey works in the store as a salesman and is not personally liable for the debts of the business.

3. Mark and Melissa own and operate an ice cream parlor and are both personally liable for the debts of the business. Sharon works in the parlor serving ice cream and is not personally liable for the debts of the business.

4.Steve and Duncan operate a music studio and are both personally liable for the debts of the business.

Answer 1

Answer:- 1.Ethan operates a television repair shop and is personally liable for the debts of the business. Kevin gave Ethan $50,000 to open the business and now shares in the profits with him. Kevin will only be liable up to his $50,000 if the business fails.

Reason:- Kevin is only liable up to his investment of $50,000 thus has limited partnership with Ethan. In the second option, Harvey is not a partner and thus there is no partnership. In the third option, Sharon is not a partner and thus there is no partnership and other two partners are both personally liable for the debts. In the fourth option, partners are both personally liable for the debts