With Regard to Liability of Partners, Which of the Following

question 109

Multiple Choice

With regard to liability of partners, which of the following is true?

• A) A limited partner has unlimited liability beyond the amount of his initial investment.
• B) A general partner could not be liable for losses suffered by a client because of misapplication of funds unless he knew about or took part in the misapplication.
• C) A general partner who retires from the partnership by giving notice of his leaving to the other partners could still be found liable for debt pursuant to a contract made when he was a partner.
• D) A general partner has limited liability for any loss suffered because of the negligent act (e.g., omission) of one of her partners.
• E) The partnership, and thus the partners, are liable for any loss suffered because of a tort committed by its employee outside the course of his employment.

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Definitions:

Cost of Equity

The return that investors expect for investing in a company's equity, considering the risk of the investment.

After-Tax Cash Savings

The increase in cash flow that results after all applicable taxes have been deducted from the gross income.

Cost of Capital

The rate of return that a business must earn before generating value, taking into account the cost of funding the business through equity or debt.

Capital Structure

The combination of a corporation's long-term obligations, particular short-term liabilities, common stock, and preferred shares, employed to fund its general activities and expansion.