Shannon Has Just Become a Partner in a & R

question 2

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.Shannon:

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

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Definitions:

Operating Assets

Assets used in the daily operations of a business to generate revenue, such as plant, equipment, inventory, and receivables.

Residual Income

The income that an entity generates after accounting for the cost of capital, showing what is effectively left over for shareholders.

Centralized Organizations

Organizations where decision-making authority is concentrated at the top levels of management, with lower levels primarily responsible for implementing decisions.

Business Segments

Divisions within a company that operate in different types of markets or industries, each with its own specific financial and operational strategies.