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Partnerships and shareholders

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › Partnerships and shareholders

  • This topic has 1 reply, 2 voices, and was last updated 1 month ago by Ken Garrett.
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  • January 16, 2021 at 9:25 am #606080
    applessauce
    • Topics: 85
    • Replies: 65
    • ☆☆

    I was just reading across the study text of kaplan and I came across this certain question

    Which of the following statements regarding types of business is correct?

    A Partnerships are owned and run by one or more people

    B Private limited companies can sell shares to the public

    C Shareholders in companies typically have limited liability

    D The owners of sole traders typically have limited liabillity

    The correct answer was C

    I was just wondering why A can’t be the answer
    That statement seems pretty correct too
    Could you please explain why that statement is wrong

    January 16, 2021 at 11:38 am #606113
    Ken Garrett
    Keymaster
    • Topics: 9
    • Replies: 9047
    • ☆☆☆☆☆

    C is certainly correct and B and D definitely wrong.

    The definition of a partnership: “the relation which subsists between persons carrying on a business in common with a view of profit.”

    To my mind this would make A correct as well. However there can be ‘silent partners’ who contribute capital to the business but who take no part in running the business. That consideration would make A false, but I don’t know if that is the reason for the answer or whether the question is simply messed up.

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