Which of the following statements about partnerships is true?

• A. Profits are automatically split equally
• B. Partners are not liable for each other's actions
• C. Conflicts can arise between partners
• D. Partnerships are always easy to establish

Answer: (C)

In a partnership, conflicts can indeed arise between partners due to differing opinions, management styles, or personal issues that emerge over time. Each partner may have different expectations about the direction of the business, how profits should be shared, or their individual roles and responsibilities, which can lead to disputes. Addressing these conflicts requires effective communication and sometimes might involve negotiation or mediation to resolve the disagreements amicably.

The other statements do not accurately depict the nature of partnerships. For instance, profits in a partnership are not automatically split equally; they can be divided based on the partnership agreement, which might specify different profit-sharing ratios. Additionally, partners are generally liable for each other's actions related to the business, meaning one partner's misconduct can put the other partners at risk. Lastly, while establishing a partnership may seem straightforward, it actually involves formal agreements and compliance with regulations, making it not always easy to set up.