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Unformatted text preview: Study Sheet #1 1- Upon Dissolution of a partnership- Dissolution of the assets. PAGE 953 Outside creditors then refund of advances, then return of contributions to capital, and then the divison of remaning assets in accordance with partnership agreement if there is no agreement it is divided up equally as profits. 2- How do partners share profits and losses PAGE 944 Parties share profits and losses equally. Sharing profits is prima dacie evidence of a partnership. 3- Are partners entitled to compensation PAGE 952 A partner is not entitled to compensation for services performed for the partnership. There is no right to compensation for services even if the services are unusual or more extensive than the services rendered by other parties. A sickness of another partner is a risk assumed in the relationship. Partners can agree to assign one partner who will devote full time to being a manager of the business and receive for such services a salary in addition to the managing partners share of the profits. 4- Liability of a new partner PAGE 954 A person admitted as a partner into an existing partnership has limited liability for all obligations of the partnership arising before such admission. This is a limited liability in that the preadmission claim may be satisfied only out of partnership property of the newly admitted partner. 5- Rights of a partner PAGE 952 These rights stem from the fact that the partner is a co owner of the partnership business. Each partner has a right to take an equal part in transacting the business of the firm. All partners are equally entitled to inspect the books of the firm. Each partner is entitled to a share of the profits. A partner is not entitled to compensation for services performed for the partnership. A partner is entitled to the return of any money advanced to or for the firm. Contributions to capital do bear draw interest they are treated as if a stranger made the advance and bear interest from the date of the advance. 6- When does Dissolution occur? PAGE 958 When the firm is dissolved by the act of a partner notice must be given to the other partners unless that partners act clearly shows an intent to withdraw from or to dissolve the firm. When dissolution is caused by the act, death, or bankruptcy of a partner each partner is liable to the copartners for a share of any liability created by any other partners without knowledge of the partner who caused the dissolution. by any other partners without knowledge of the partner who caused the dissolution....
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- Spring '08