Questions: Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the frm's debts? Sole proprietorship Corporation Limited partnership General partnership Joint stock company

Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the frm's debts? Sole proprietorship Corporation Limited partnership General partnership Joint stock company
Transcript text: Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the frm's debts? Sole proprietorship Corporation Limited partnership General partnership Joint stock company
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Solution

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Answer

The answer is General partnership.

Explanation
Option 1: Sole proprietorship

A sole proprietorship is a business owned and operated by a single individual. Since Will and Bill are both involved in the decision-making and share profits or losses equally, this option does not apply.

Option 2: Corporation

A corporation is a legal entity that is separate from its owners, providing limited liability protection to its shareholders. In this scenario, Will and Bill have full personal liability for the firm's debts, which is not characteristic of a corporation.

Option 3: Limited partnership

A limited partnership involves at least one general partner with unlimited liability and one or more limited partners with liability restricted to their investment. Since both Will and Bill have full personal liability, this option is not applicable.

Option 4: General partnership

A general partnership is a business arrangement where two or more individuals share management responsibilities and profits or losses, with each partner having unlimited personal liability for the debts of the business. This description matches the scenario provided, where Will and Bill equally share decision-making and have full personal liability.

Option 5: Joint stock company

A joint stock company is a business entity where shares of the company's stock can be bought and sold by shareholders, typically providing limited liability. This does not fit the scenario, as Will and Bill have full personal liability.

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