What distinguishes a partnership from a corporation?

The distinction that best highlights what differentiates a partnership from a corporation is the notion of co-ownership coupled with personal liability, which is encapsulated in the correct answer.

Partnerships are defined by the relationship between two or more individuals who agree to carry on a business together for profit. This arrangement inherently means that the partners share in the ownership of the business. More importantly, partnerships typically entail personal liability for the debts and obligations of the business. Each partner can be held personally accountable for the partnership's debts, which contrasts sharply with corporations, where liability is generally limited to the extent of the shareholder's investment in the company, thus shielding personal assets.

This understanding of personal liability and co-ownership highlights a fundamental characteristic of partnerships that sets them apart from corporations, where such limited liability shields are a cornerstone principle of corporate structure.

In contrast to this, the other choices either misrepresent aspects of the relationship or do not adequately capture the essence of what differentiates the two business entities. For example, corporations are indeed separate legal entities, but this characteristic does not help clarify the core distinction relevant to ownership and liability. Additionally, while management flexibility can vary between partnership structures and corporate governance, it does not address the fundamental nature of liability and ownership