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.

Question

Quizplus · Accepted Answer

According to the principle of unlimited liability, partners are personally liable for all partnership debts and obligations. Therefore, Shannon has unlimited personal liability for all partnership obligations that occur after she became a partner. However, she is only liable to the extent of her capital contribution for obligations that existed at the time she became a partner. This means that if the partnership had debts or obligations prior to Shannon's admission as a partner, she would not be personally liable for those pre-existing obligations beyond her capital contribution of $10,000.

Shannon Has Just Become a Partner in a & R