Which One of the Following Statements Is Correct with Respect

question 121

Multiple Choice

Which one of the following statements is correct with respect to the liability of partners?

• A) When a partner enters into a partnership arrangement, he can only lose what he has invested in that partnership.
• B) If a third party is injured because of an activity carried on by the partnership, that third party can only go after the personal assets of a partner if the assets of the partnership are not enough to provide compensation and the damage was actually caused by the conduct of that partner.
• C) A general partner is responsible, independent of what he has invested, for any losses caused to outsiders through the partnership business if the assets of the partnership are not enough to cover the claim.
• D) If there are three equal partners in a partnership, an injured third party can only collect one third of the claim from any one partner.
• E) A partner can protect himself from any liability beyond his investment if one of the other partners specifically agrees in the partnership agreement to be responsible for all such liability.

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Definitions:

Variable Manufacturing Overhead

Costs that change with the level of production output and are associated with the manufacturing process, excluding direct labor and materials.

Cash Collections

Cash collections refer to the process of receiving payments from customers, typically involving money owed for goods sold or services rendered.

Cost of Goods Sold

The total expenses related directly to the manufacturing of a product, encompassing material, labor, and overhead costs, essential for determining gross profit.

Merchandise Inventory

Goods that a retailer, wholesaler, or distributor holds for the purpose of sale to customers.