Which of the Following Is True with Respect to the Distribution

question 46

Multiple Choice

Which of the following is true with respect to the distribution of assets following dissolution of a limited partnership?

• A) Partners are paid before ex-partners for unpaid distributions.
• B) Limited partners who are creditors are paid at the same priority as third-party creditors of the partnership.
• C) The amount limited partners are paid for their partnership interests has no relation to the proportion in which they share in distributions.
• D) Capital contributions are paid before unpaid distributions.

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Definitions:

Transaction

An exchange or transfer of goods, services, or funds between parties.

Unsecured Creditor

A creditor who has extended credit without obtaining any collateral, making them more vulnerable in the event of debtor default.

Secured Creditor

A creditor that may look to particular assets of the debtor to ensure payment of the debt.

Chattel Mortgage

A chattel mortgage is a loan agreement where personal movable property is used as collateral for the loan, and the borrower retains possession while the lender has a security interest.