CA Foundation Exam > CA Foundation Questions > Liability of partner is __________.a)Limitedb...
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Liability of partner is __________.
- a)Limited
- b)Unlimited
- c)Restricted upto amount of capital
- d)Restricted upto profits
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Liability of partner is __________.a)Limitedb)Unlimitedc)Restricted up...
The answer is a.
A limited liability partnership, or LLP, is a partnership where one partner is not liable for the negligent acts of another partner or an employee, who do not act under his supervision. However, it is pertinent to note that fraud is an exception to the limited liability rule. First started in the USA in 1980, a large number of nations have now incorporated this concept in their domestic laws. In India, LLPs are governed by the Limited Liability Partnership Act, 2008, and this article discusses this Act in detail.”
This question is part of UPSC exam. View all CA Foundation courses
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Liability of partner is __________.a)Limitedb)Unlimitedc)Restricted up...
Liability of partner is Unlimited.
- In a general partnership, the liability of partners is unlimited.
- This means that the partners are personally liable for all the debts and obligations of the partnership.
- If the partnership is unable to pay its debts, creditors can go after the personal assets of the partners to satisfy the debts.
- Each partner is individually and jointly responsible for the partnership's liabilities.
- If one partner is unable to fulfill their share of the obligations, the other partners may be required to cover the shortfall.
- This unlimited liability can be a significant risk for partners, as it exposes their personal assets to potential loss.
- It is important for partners to carefully consider the potential liabilities before entering into a partnership agreement.
- It may be advisable to explore other business structures that offer limited liability protection, such as a limited liability partnership (LLP) or a limited liability company (LLC).
Community Answer
Liability of partner is __________.a)Limitedb)Unlimitedc)Restricted up...
Liability of partner
Unlimited
- In a general partnership, the liability of partners is unlimited.
- This means that each partner is personally liable for the debts and obligations of the partnership.
- Creditors can go after the personal assets of partners to satisfy any debts of the partnership.
Limited
- In contrast, in a limited partnership, there are two types of partners: general partners and limited partners.
- General partners have unlimited liability, similar to a general partnership.
- Limited partners, on the other hand, have limited liability.
- Limited partners are only liable up to the amount of their capital contribution to the partnership.
- This means that their personal assets are protected beyond their initial investment in the partnership.
Restricted upto amount of capital
- The liability of partners in a limited partnership is restricted to the amount of capital they have invested in the partnership.
- This provides limited partners with some level of protection from the debts and obligations of the partnership.
In conclusion, the liability of a partner can be unlimited in a general partnership but is limited in a limited partnership, where it is restricted to the amount of capital contributed by the partner.
Unlimited
- In a general partnership, the liability of partners is unlimited.
- This means that each partner is personally liable for the debts and obligations of the partnership.
- Creditors can go after the personal assets of partners to satisfy any debts of the partnership.
Limited
- In contrast, in a limited partnership, there are two types of partners: general partners and limited partners.
- General partners have unlimited liability, similar to a general partnership.
- Limited partners, on the other hand, have limited liability.
- Limited partners are only liable up to the amount of their capital contribution to the partnership.
- This means that their personal assets are protected beyond their initial investment in the partnership.
Restricted upto amount of capital
- The liability of partners in a limited partnership is restricted to the amount of capital they have invested in the partnership.
- This provides limited partners with some level of protection from the debts and obligations of the partnership.
In conclusion, the liability of a partner can be unlimited in a general partnership but is limited in a limited partnership, where it is restricted to the amount of capital contributed by the partner.
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Liability of partner is __________.a)Limitedb)Unlimitedc)Restricted upto amount of capitald)Restricted upto profitsCorrect answer is option 'B'. Can you explain this answer?
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