National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

What are the two types of business partnerships mentioned?

1. General and Limited

2. Limited and Sole

3. Unlimited and General

4. General and Joint

The correct answer is: General and Limited

The two types of business partnerships are general and limited partnerships. A general partnership involves all partners sharing in the management of the business and being personally liable for the debts and obligations of the partnership. This means that each partner has equal responsibility and authority, and they share both profits and losses. In contrast, a limited partnership includes at least one general partner who manages the business and is personally liable for its debts, while limited partners typically contribute capital and share in profits but do not participate in management and have limited liability. This structure allows investors to participate in a business with reduced personal risk. Understanding the distinction between these two types of partnerships is crucial for entrepreneurs when deciding how to structure their business, as the choice impacts liability, authority, and profit-sharing.