Each partner is personally and individually liable for all partnership liabilities. Creditor’s claims attach first to partnership assets. If these are insufficient, the claims then attach to the personal resources of any partner, irrespective of that partner’s equity in the partnership. Because each partner is responsible for all the debts of the partnership, each partner is said to have unlimited liability.
Unlimited liability is the owner’s personal responsibility for any debts or damages incurred by the operation of a business.
More from this Section
- Net income & net loss
Net income results when revenues exceed expenses. A net loss occurs when expenses exceed revenues.
- Straight-line method of amortization
Straight-line method of amortization is a method of amortizing bond discount or bond premium that results in allocating the same amount to interest expense in each interest period.
- Asset Turnover Ratio
The asset turnover ratio analyzes the productivity of a company’s assets. It tells us how many dollars of sales a company generates for each dollar invested in assets.
Variance is the difference between total actual costs and total standard costs. The variance is expressed in total dollars, and not on a per unit basis.
- High-low method
The high-low method uses the total costs incurred at the high and low levels of activity to classify mixed costs into fixed and variable components.
- Bond certificate
Bond certificate is a legal document that indicates the name of the issuer, the face value of the bonds, and such other data as the contractual...
- Error of omission
An error of omission is one where a transaction has not been recorded in the books of account either wholly or partially. In the