Which of the Following Is True of the Liability to Creditors

question 36

Multiple Choice

Which of the following is true of the liability to creditors in the process of continuation of a partnership?

• A) Withdrawing partners are liable for new obligations though they have given a notice of withdrawal.
• B) New partners are liable for prior obligations only to extent of contribution unless they agree to greater liability.
• C) Continuing partners are the only people liable for prior obligations.
• D) Withdrawing partners are liable for prior obligations even though they are released by novation.

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Definitions:

Corporate Debts

Obligations that a corporation owes to creditors, which can include bank loans, bonds, and other forms of borrowing.

Revised Act

A legal document that has been updated or amended from its original version to reflect changes in the law or practice.

Incorporators

Individuals who prepare and sign the articles of incorporation for a new corporation, formally establishing the entity.

Certificate

A document verifying the ownership or status of something, often used in legal, academic, or financial contexts.