Shannon Has Just Become a Partner in a & R

question 14

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 debts regardless of whether they were incurred before or after she became a partner.
• D) 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:

Receivables

Amounts of money owed to a company by its customers or clients for goods or services provided on credit.

Bad Debt Expense Adjustment

An accounting entry to estimate and record the amount of accounts receivable that is not expected to be collected.

Accounts Receivables Turnover

A financial ratio that measures how often a company collects its average accounts receivable over a period.

Credit Sales

Sales transactions where payment is deferred, allowing customers to purchase goods or services on credit.