Which option describes the liability situation in a general partnership?

In a general partnership, the liability situation is characterized by joint and several liabilities. This means that each partner is both jointly responsible for the obligations and debts of the partnership and individually liable for the full amount of those debts. If one partner fails to meet their share of the liabilities, the other partners can be held accountable for covering the shortfall. This liability structure encourages partners to be mindful of the financial and legal actions taken by the partnership, as their personal assets can be at risk if the partnership cannot meet its financial obligations.

In contrast, limited liability for all partners is incorrect as limited liability typically applies only in specific business structures, such as limited partnerships or limited liability companies, not in general partnerships. Saying that only one partner is liable for debts misrepresents the nature of general partnerships since all partners share liability equally. The notion of no liability if the partnership is inactive is misleading, as partners can still be liable for debts incurred even if the business is not currently operating. Thus, joint and several liabilities accurately represents the responsibilities that partners have in a general partnership.