Chapter 6: Problem 5

A partnership (LO1) a) must have exactly two owners b) must have more than two owners c) must have more than one owner d) may have more than one owner

Short Answer

Expert verified

A partnership must have more than one owner (option c) and may have more than one owner (option d). Both statements are true, as a partnership involves at least two people who agree to share profits or losses of a business.

Step by step solution

Examining Option a)

The option a) states that "a partnership must have exactly two owners". In reality, a partnership does not have a strict limit of two owners. Therefore, this statement is incorrect. A partnership can be formed by two or more persons.

Examining Option b)

The option b) is "a partnership must have more than two owners". Again, this is incorrect. Although a partnership can have more than two owners, it is not mandatory. A partnership can also be formed by just two persons.

Examining Option c)

The option c) says "a partnership must have more than one owner". This statement is true. A partnership by definition involves more than one person who agree to share the profits or losses of a business. It can’t be formed by one person alone.

Examining Option d)

The option d) states that "a partnership may have more than one owner". This is also a true statement. A partnership may be composed of two or more people, and the number can increase beyond two based on the nature of the business.

Conclusion

Based on our analysis, both options c) and d) are correct. A partnership must (option c)) and may (option d)) have more than one owner. This is intrinsic to the definition and nature of a partnership.