ACCA Advanced Financial Management Practice Exam 2025 – Complete Study Guide

The advantage of partnership units lies primarily in the ability to avoid corporate taxation. Partnerships typically do not pay income tax at the entity level. Instead, profits are passed through to the individual partners, who report this income on their personal tax returns. This pass-through taxation can lead to tax efficiencies, as it helps avoid the double taxation that occurs in C Corporations, where profits are taxed at both the corporate and individual levels when distributed as dividends. This structure can be particularly beneficial for partners looking to maximize their after-tax returns and manage their tax liabilities more effectively.

When looking at the other options, the reason they do not align with the advantages of partnership units becomes clear. High dividends are generally associated with corporations that distribute profits to shareholders, which does not apply to partnerships in the same way. Access to global markets is not inherently a feature of partnership units; this characteristic depends more on the nature of the business and its strategy rather than its structure. Lastly, limited partnership rights refer to the limitations imposed on certain partners (specifically limited partners) in terms of their involvement in management; however, this point does not highlight an advantage but rather a characteristic that may limit participation in management decisions.