FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:QUESTION 5
Ronald and Emily form Rosebush Limited Partnership. Ronald contributes $20,000 and becomes a general partner. Emily
contributes $20,000 and becomes a limited partner.
At the end of the first year of operation, a third party sues Rosebush, L.P. for a tort.
What is the potential liability of Ronald and Emily?
O Ronald's liability is $20,000; Emily's liability is $20,000.
O Ronald's liability is unlimited; Emily's liability is $20,000.
O Ronald's liability is unlimited; Emily's liability is unlimited.
O Ronald's liability is $20,000; Emily's liability is $0.
QUESTION 6
Under the concept of joint and several liability, who is liable for the debts of a general partnership?
O The partner who is originally responsible for the debt will be the only party liable for the debt.
O Each partner is potentially liable for the entire debt of the partnership.
The partnership is responsible for the debt. If the partnership can't pay the debt, the creditor has no other recourse.
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