Which One of the Following Statements Is Correct

question 60

Multiple Choice

Which one of the following statements is correct?

• A) If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed by the other partners in the profit and loss ratio of those partners.
• B) Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account balances absent an alternate income-sharing plan stated in the partnership agreement.
• C) A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan.
• D) Partners may not receive any cash before partnership creditors receive cash when liquidating a partnership.
• E) All cash payments to partners are made using their profit and loss ratio when liquidating the partnership.

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Definitions:

Nature of Activity

The specific characteristics, purpose, or type of actions and operations carried out by an individual or organization.

State Law

Legal regulations and rules that are enacted and enforced by individual states within a country, differing from federal or national laws.

Obtaining Insurance

The process of acquiring a policy that provides financial protection against losses or damages from various risks.

Proportionate Share

A part or portion of something that is divided among parties based on a specific criterion, often related to ownership or contribution.