Which statement best defines a partnership?

• A. Voluntary association of 2 or more who have combined resources to carry on as co-owners of a lawful enterprise for joint profit
• B. A business owned by a single individual with unlimited liability
• C. A legal entity formed to raise capital from shareholders
• D. An organization that operates as a nonprofit

Answer: (A)

A partnership is a voluntary collaboration of two or more people who pool resources to own and run a business together for shared profits. That exact idea—a voluntary association, combined resources, co-ownership of a lawful enterprise, and the pursuit of joint profit—captures what a partnership is. The other descriptions point to different business forms: a sole proprietorship is owned by one person with unlimited liability; a corporation is a legal entity formed to raise capital from shareholders; and a nonprofit is organized to operate without profit. Recognizing the emphasis on multiple owners sharing ownership and profits explains why this statement best defines a partnership.