Shannon Has Just Become a Partner in a & R

question 36

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.Which of the following is correct with respect to Shannon's liability for partnership obligations?

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

Periodic Inventory System

An inventory system where counts are carried out at specific intervals to determine the level of inventory at a particular time.

Most Recent Costs

The latest costs incurred in acquiring or producing goods and services, often used in inventory valuation and costing methods.

Cost of Merchandise Sold

The direct costs tied to the production of goods sold by a company, including the cost of the materials and labor.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.