Question

State the following statement is true:

Partner’s personal assets can also be used for payment of firm’s liabilities.

Answer 1

This statement is true.

Explanation:

• In a partnership, partners have unlimited liability, meaning that if the firm’s assets are insufficient to cover its liabilities, the partners are personally liable. This means that the personal assets of the partners can be used to pay off the firm’s debts and obligations.
• This is one of the main distinctions between a partnership and a limited liability company, where the owner’s personal assets are protected from the business’s debts.