Question

Which legal entity is paired with the owner(s) that do not have limited liability for the entity’s debts?

A. LLC - LLC member-mangers

B. Corporation – Shareholders

C. General Partnership – Partner

D. Limited Partnership - General partner

E. Both Corporation - Corporation and Limited Partnership - General partner.

F. A, C and D only

G. B and D only

Answer 1

Solution: The answer is C. General Partnership – Partner

Reason: An unlimited liability entity generally includes general partners and sole-proprietors who are equally responsible for all liabilities incurred by the entity.

Option A. LLC - LLC member-mangers is not correct because LLC means Limited Liability Corporation whose liability is limited to its assets.

Option B. Corporation – Shareholders is not correct because even corporation was liable to pay debt but liability of shareholders is limited to the face value of shares holding.

Option D. Limited Partnership - General partner is not correct because partnership itself is limited partnership so their liability is limited.

Option E. Both Corporation - Corporation and Limited Partnership - General partner. is not correct because all the entity have limited liability

Option F. A, C and D only is not correct because Option C is correct and Option A, D are not correct.

Option G. B and D only is not correct because both entities have limited liability.