Which statement best describes liability after dissolution?

Which statement best describes liability after dissolution?

• A. Only partnership assets are liable; personal assets are never at risk.
• B. Creditors have priority; personal assets may be used after partnership assets are exhausted.
• C. Personal assets are used before partnership assets.
• D. Liability ends once dissolution occurs.

Answer: (B)

When winding up after dissolution, debts are paid first from the partnership’s assets. If those assets aren’t enough to cover what’s owed, the partners’ personal assets can be exposed to satisfy the remaining debts because partners generally have joint and several liability for partnership obligations. So the statement that creditors have priority and personal assets may be used after partnership assets are exhausted captures the correct approach to liability post-dissolution. Liability doesn’t automatically end with dissolution, and personal assets aren’t shielded until the partnership’s assets are fully used; meanwhile, partnership assets must be used before turning to personal assets.

When winding up after dissolution, debts are paid first from the partnership’s assets. If those assets aren’t enough to cover what’s owed, the partners’ personal assets can be exposed to satisfy the remaining debts because partners generally have joint and several liability for partnership obligations. So the statement that creditors have priority and personal assets may be used after partnership assets are exhausted captures the correct approach to liability post-dissolution. Liability doesn’t automatically end with dissolution, and personal assets aren’t shielded until the partnership’s assets are fully used; meanwhile, partnership assets must be used before turning to personal assets.