- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 1. Organizational Forms, Corporate Issuer Features, and Ownership
- Subject 1. Organizational Forms of Businesses
CFA Practice Question
Which statement is false?
A. The limited partners have limited liability (to the extent of their investment in the partnership) for liabilities of the partnership.
B. In a partnership, profits or losses of the partnership have to be reported by the partnership.
C. In a limited partnership, the general partner has unlimited liability for partnership liabilities.
Explanation: B is false. Profits or losses of the partnership have to be reported by the partners themselves. The partnership has no legal identity.
The limited partners have limited liability (to the extent of their investment in the partnership) for liabilities of the partnership. The general partner has unlimited liability for partnership liabilities. A limited partner who engages in managing the limited partnership will lose that partner's limited liability.
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