What characterizes a general partnership?

A general partnership is characterized primarily by its composition, which consists solely of general partners. In a general partnership, each partner is actively involved in the management of the business and has unlimited liability for the debts and obligations of the partnership. This means that if the partnership incurs debts or faces a lawsuit, each general partner is personally responsible for the entire financial obligation, not just a portion based on their investment.

The key distinction of a general partnership compared to other business structures, such as limited partnerships or corporations, lies in the nature of liability and involvement in management. In a limited partnership, there are both general and limited partners, where limited partners typically do not participate in management and their liability is limited to their investment in the partnership.

Therefore, the structure of a general partnership, which is made up entirely of general partners, aligns with the correct answer and underscores the shared responsibility and risk that all partners undertake in this form of business organization.