Liability comparisons Nerissa Smith has invested $25,000 in Northeast Productions Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of Nerissa's personal liabilit , if any, in each of the following situations. a. Northeast Productions Company is a sole proprietorship owned by Ms. Smith. b. Northeast Productions Company is a 50-50 general partnership of Nerissa Smith and Roger Brown. c. Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner. d. Northeast Productions Company is a corporation. 1) If Northeast Productions Company is a 50-50 partnership of Nerissa Smith and Roger Brown,: (Select the best answer below.) A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested. B.Ms. Smith has limited liability, which is $30,000, or half of the $60,000 in unpaid debts. C.Ms. Smith has unlimited liability, which means creditors can claim against her personal assets. D.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. 2) If Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner,: (Select the best answer below.) A.Ms. Smith has unlimited liability which means creditors can claim against the $25,000 she invested as well as her other personal assets. B.Ms. Smith unlimited liability, which means creditors can claim against her personal assets. C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. D.Ms. Smith has limited liability which means that creditors can only claim against her personal assets. 3) If Northeast Productions Company is a corporation,: (Select the best answer below.) A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested. B.Ms. Smith has limited liability, which is the amount of $60,000 in unpaid debts. C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. D. Ms. Smith has unlimited liability, which means creditors can claim against her personal assets.

Liability comparisons Nerissa Smith has invested $25,000 in Northeast Productions Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of Nerissa's personal liabilit , if any, in each of the following situations. a. Northeast Productions Company is a sole proprietorship owned by Ms. Smith. b. Northeast Productions Company is a 50-50 general partnership of Nerissa Smith and Roger Brown. c. Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner. d. Northeast Productions Company is a corporation. 1) If Northeast Productions Company is a 50-50 partnership of Nerissa Smith and Roger Brown,: (Select the best answer below.) A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested. B.Ms. Smith has limited liability, which is $30,000, or half of the $60,000 in unpaid debts. C.Ms. Smith has unlimited liability, which means creditors can claim against her personal assets. D.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. 2) If Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner,: (Select the best answer below.) A.Ms. Smith has unlimited liability which means creditors can claim against the $25,000 she invested as well as her other personal assets. B.Ms. Smith unlimited liability, which means creditors can claim against her personal assets. C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. D.Ms. Smith has limited liability which means that creditors can only claim against her personal assets. 3) If Northeast Productions Company is a corporation,: (Select the best answer below.) A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested. B.Ms. Smith has limited liability, which is the amount of $60,000 in unpaid debts. C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested. D. Ms. Smith has unlimited liability, which means creditors can claim against her personal assets.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Liability comparisons Nerissa Smith has invested $25,000 in Northeast Productions Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of Nerissa's personal liabilit , if any, in each of the following situations.

a. Northeast Productions Company is a sole proprietorship owned by Ms. Smith.

b. Northeast Productions Company is a 50-50 general partnership of Nerissa Smith and Roger Brown.

c. Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner.

d. Northeast Productions Company is a corporation.

1) If Northeast Productions Company is a 50-50 partnership of Nerissa Smith and Roger Brown,: (Select the best answer below.)

A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested.

B.Ms. Smith has limited liability, which is $30,000, or half of the $60,000 in unpaid debts.

C.Ms. Smith has unlimited liability, which means creditors can claim against her personal assets.

D.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested.

2) If Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner,: (Select the best answer below.)

A.Ms. Smith has unlimited liability which means creditors can claim against the $25,000 she invested as well as her other personal assets.

B.Ms. Smith unlimited liability, which means creditors can claim against her personal assets.

C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested.

D.Ms. Smith has limited liability which means that creditors can only claim against her personal assets.

3) If Northeast Productions Company is a corporation,: (Select the best answer below.)

A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested.

B.Ms. Smith has limited liability, which is the amount of $60,000 in unpaid debts.

C.Ms. Smith has limited liability, which guarantees that she cannot lose more than the $25,000 she invested.

D. Ms. Smith has unlimited liability, which means creditors can claim against her personal assets.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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