Which of the Following Is True About Liability of Partners

question 62

Multiple Choice

Which of the following is true about liability of partners in a general partnership?

• A) Partners have limited liability for the organization's debts.
• B) Partners personal assets, which are not associated with the partnership, may not be claimed by the creditors.
• C) From a creditor's perspective, the liability of each partner extends only to a pro rata share.
• D) Any partner who has to pay beyond his pro rata share will have to make use of his future buyout interest.
• E) A partner having unlimited liability will be jointly and severally liable for the partnership's obligations.

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Definitions:

Payback Method

A capital budgeting technique that estimates the time required to recoup the initial investment in a project.

Cash Flows

The inflows and outflows of cash and cash equivalents, representing the operating, investing, and financing activities of an entity.

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Internal Rate

Internal Rate, often referred to as Internal Rate of Return (IRR), is the rate of growth a project is expected to generate, used in capital budgeting to estimate the profitability of potential investments.