Question

There are three primary disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of the organization, and (3) difficulty of transferring ownership. These combine to make it difficult for partnerships to attract large amounts of capital and thus to grow to a very large size.

a. Trueb. False

Answer 1

Answer: False

Explanation: In simple words, regular partnership refers to a business arrangement in which two or more individuals combine their efforts for attaining common objectives like earning profit.

A partnership firm is not a separate legal entity, thus, the owners and firms are considered same leading to unlimited liability of the partners. But these entities also run their business on the assumption of continued perpetual existence and the ownership transfer is also very simple.

Hence from the above we can conclude that the given statement is false.