Shannon Has Just Become a Partner in a & R

question 36

Multiple Choice

Shannon has just become a partner in A & R Accounting Partnership.Her capital contribution is $10,000,which she paid from her savings.Which of the following is correct with respect to Shannon's liability for partnership obligations?

• A) Shannon has no liability for partnership debts that existed at the time of her admission as a partner.
• B) Shannon is liable only to the extent of her capital contribution for partnership debts that occur after her admission as a partner.
• C) Shannon has unlimited personal liability for all partnership debts regardless of whether they were incurred before or after she became a partner.
• D) Shannon has unlimited personal liability for all partnership obligations that occur after she became a partner;she has liability to the extent of her capital contribution for obligations that existed at the time she became a partner.

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Definitions:

Business Shutdown

A temporary or permanent cessation of operations by a firm due to financial difficulties or external circumstances.

Construction Firm

A business entity engaged in the construction of buildings, infrastructure, and other physical structures.

Sunk Cost

Costs that have already been incurred and cannot be recovered.