Question

Angelica and Celeste invested all their savings in a small pizzeria they opened outside the University of Missouri. They operated the business as a general partnership. After 11 months, the business went broke and Angelica and Celeste were left with outstanding bills of $43,650, which was more than their initial investment in the company. Angelica and Celeste canAnswers:
lose their personal assets as the result of their company's financial problems.
lose only the funds they originally invested in their company.
lose only the total value of the assets actually used to operate the business.avoid any liability for these debts since a partnership is considered to be a business entity that is separate and distinct from the partners who own it.

Answer 1

Answer:

The answer is: Angelica and Celeste lose their personal assets as the result of their company's financial problems.

Explanation:

The advantages of a general partnership are:

• Each partner files the profits or losses of the business on his or her own personal income tax return.
• This way the business does not get taxed separately.
• Easy to establish.

Some of the disadvantages are:

• Partners share unlimited personal liability with respect to debts, obligations, contracts, torts, potential lawsuits, etc.

• A partner cannot transfer interest in the partnership without the unanimous consent of the partners.

Answer 2

Answer:

The correct answer is letter "A":  Lose their personal assets as the result of their company's financial problems.

Explanation:  

A general partnership is the type of business structured in a manner in which all the people involved in the company's ownership share the property, income, and legal obligations. General partnerships are said to be unlimitedly liable as it is possible to take into account the personal assets of the individuals concerned in the face of business obligations.