Which of the Following Statements Is TRUE with Respect to the Risk

question 15

Multiple Choice

Which of the following statements is TRUE with respect to the risk of liability under a partnership?

• A)A person may be held liable as a partner,as long as the reasonable person would believe that that person was a partner in the partnership.
• B)Under a limited liability partnership,a partner may avoid liability if another partner commits a tort of negligence if certain requirements are met by the partner seeking to avoid liability.
• C)Because of their special position within partnerships,managing partners cannot be held liable for torts and breaches of contract that are committed by other partners.
• D)A partner cannot be held liable for torts and breaches of contract that another partner committed while acting in an unauthorized way.
• E)A partner is liable for debts and liabilities of the spouses of their partners.

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Definitions:

Sunk Cost

A past expenditure that has already been incurred and cannot be recovered, which should not affect current or future financial decisions.

Market Value

The current price at which an asset or company can be bought or sold, determined by the supply and demand dynamics in the market.

Erosion Cost

Costs that occur when the introduction of a new project or product negatively impacts the sales and profits of existing products.