Which individuals are typically involved in the formation and operation of a partnership?

• A. Shareholders who own stock in a corporation
• B. Creditors who lend money to the business
• C. A single individual acting as the sole proprietor
• D. Two or more co-owners who share profits and losses

Answer: (D)

Verified step by step guidance

1. Understand the concept of a partnership: A partnership is a business structure where two or more individuals come together to operate a business and share its profits and losses.
2. Differentiate partnerships from other business structures: Unlike corporations (which involve shareholders owning stock) or sole proprietorships (which involve a single individual), partnerships require co-ownership by multiple individuals.
3. Identify the key characteristics of a partnership: Partnerships involve shared decision-making, joint ownership, and mutual responsibility for profits and losses.
4. Clarify the role of co-owners in a partnership: Co-owners in a partnership contribute resources, skills, or capital to the business and agree on how profits and losses will be distributed.
5. Conclude that the correct answer is 'Two or more co-owners who share profits and losses,' as this aligns with the definition and operation of a partnership.