The second type of entity is a partnership which has at least two or more owners. In a partnership, the owners are called as partners. Partnerships are organized as small or medium size entities.

Similar to proprietorship, the cancellation of the partnership may be caused either by one of the partners’ death or choice of cancelling it and the partners are personally liable for the partnership’s liabilities. Surely, based on the entity concept the accounting process of a partnership is separate from the personal records of the partners. Partnerships are not separate taxable entities. The correct answer is E.