Question

​Heidi, Sergei,​ Shou-Ju, and Jesus form a general partnership to operate a sporting equipment store. After their first store is​ successful, they expand until the partnership owns 100 stores. At that​ time, Heidi dies. Which of the following is​ true?A. All of the partnership assets transfer to​ Heidi's heirs.
B. Heidi's heirs receive nothing.
C. Heidi's heirs now have the right to receive​ Heidi's one-quarter of the​ partnership's profits and other partnership distributions.
D. Heidi's share of profits is split among the remaining 3 partners.
E. One quarter of the partnership assets transfer to​ Heidi's heirs.

Answer 1

Answer: D. Heidi's share of profits is split among the remaining 3 partners.

Explanation: A general partnership is a form of business arrangement by which two or more individuals agree create a business, sharing in all assets, profits, and financial and legal liabilities. However, unless there is a signed written agreement between partners when starting the business, with a clause setting out what would happen on the occurrence of death, the general partnership dissolves after the death of a partner. If the partnership terminates, then the assets and outstanding liabilities are all sold and the proceeds are divided equally among the partners. Therefore, Heidi's share of profits is split among the remaining 3 partners.