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Which of the following statements is correct?
a. Sole proprietorships are subject to more regulations than corporations.
b. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner.
Sample Answer
Both statements a. and b. are incorrect.
a. Sole proprietorships are typically subject to fewer regulations compared to corporations. Corporations, especially larger ones, are subject to more extensive regulations due to their complex structure and scale of operations.
b. In a partnership, the rights, privileges, and liability exposure of each partner can vary based on the terms outlined in the partnership agreement. Partnerships can be structured in various ways, such as general partnerships where all partners share equal rights and liabilities, or limited partnerships where there are distinctions between general partners with unlimited liability and limited partners with restricted liability.
