General Partnership Dissolution

Question 1

Dissolution occurs when…

Answer 1

automatically when any material change in partnership caused by death or withdrawal of any single general partner (GP has limited life)

Question 2

End of partnership is called…

Answer 2

Termination

Question 3

Winding Up

Answer 3

Period between dissolution & termination in which remaining partners liquidate partnership assets to satisfy partnership’s creditors

Question 4

Partnership Liability on old business

Answer 4

retain liability on:

all transactions entered into to wind-up old business by satisfying creditors who existed when winding-up began

Question 5

Partnership liability on new business

Answer 5

retain liability until:

actual notice to known creditors &
publication notice is given to all potential creditors

Question 6

Priority of Distribution

Answer 6

1- outside creditors (trade creditors)
2- inside creditors (partner’s loans)
3- capital contributions
4- profits and surplus, if any (w/out agreement- profits equally, losses like profits)

excess of 1, 2,or 3 becomes losses