Which of the Following Is True of the Liability of an Incoming

question 6

Multiple Choice

Which of the following is true of the liability of an incoming partner?

• A) An incoming partner is liable for the previous debts of the partnership.
• B) An incoming partner is equally liable for all existing debts of the partnership.
• C) An incoming partner is liable for the debts of the partnership only to the extent of his or her capital contribution.
• D) An incoming partner is not liable for the future debts of the partnership.

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Definitions:

Maturity Date

The specific date on which the principal amount of a bond, loan, or other financial instrument is due to be paid in full.

Note Dated

Indicates the specific date on which a note payable, receivable, or other legal financial document becomes effective.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Accounts Receivable

Amounts owed to a business by its customers from sales or services rendered on credit that are expected to be collected in cash.