Question

10 individuals enter into an agreement where 2 of them invest $10 each and all others invest $10,000 each to create a firm. Based on the agreement, the 2 individuals who invested $10 each assume an executive role and are responsible for day-to-day operations and overall management of business. The remaining 8 create a committee where they are reported on the state of business by the 2 executives periodically but they do not engage in day-to-day operations and are not responsible for the management of business. They have established:

A corporation

A partnership

A general partnership

A limited partnership

A limited liability partnership

None of the above

Answer 1

Solution:

It is A Partnership.

In above case , 8 Individuals Invest $10000 each and Create a firm , Hence these 8 individuals become the Partners and are not involved in the day to day activities. The 2 individuals who invested $10 each assume an executive role and are responsible for day-to-day operations and overall management of business, where they report on the state of business periodically. The 8 individuals do not engage in day-to-day operations and are not responsible for the management of business.

It is not a corporation because it does not have Seperate legal entity as Nothing in regards to the registration has corporation is mentioned above.

It is not a General Partnership has all the partners are not actively involved in running the business.

Nor it is Limited Partnership or Limited liability partnership has nothing in relation to liability of the Partners is stated in the question so it assumed to have a Unlimited Liability.