A partnership is a relation between two or more persons gathered for a common object. Generally the object of the partnership is to gain profit from a business. A partnership can be general partnership of limited liability partnership. To Indicate: the meaning of term “unlimited liability” for partnership members. A partnership can be general partnership or a limited liability partnership. In case of a general partnership, the partners have unlimited liability but in case of a limited liability partnership, the liability of partners is limited to the amounts contributed by them in the partnership. In case of a general partnership, a partner has unlimited liability for the partnership. The personal assets of a general partner can be used to pay off the partnership debts. In case of a limited liability partnership, a partner is liable to the extent of the capital amount contributed by him in the partnership. The personal assets of a limited liability partner’s cannot be used to pay off the partnership debts. Hence the term “unlimited liability” indicates the liability of a partner in case of a general partnership.

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

Expert Solution & Answer

Students have asked these similar questions

Decribe the principle of "limited liability" in a limited liability partnership.

Why is it regarded advantageous to have a written partnership agreement?

What is limited liability partnership (LLP)?

Knowledge Booster

Similar questions

Recommended textbooks for you

Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:9780357110362
Author:Murphy
Publisher:CENGAGE L
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:9780357391266
Author:Nellen
Publisher:Cengage
Entrepreneurial Finance
Finance
ISBN:9781337635653
Author:Leach
Publisher:Cengage