The Last Step Taken in Liquidating a Partnership Is To

question 64

Multiple Choice

The last step taken in liquidating a partnership is to:

• A) sell the assets.
• B) divide profits on assets with partners.
• C) pay creditors.
• D) distribute the remaining cash according to partners' capital balances.

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Definitions:

Owner's Equity

The total assets minus total liabilities of an individual owner in a business, representing the owner's residual interest in the company.

Liabilities

The financial obligations or debts of a business entity, which are settled over time through the transfer of economic benefits including money, goods, or services.

Assets

Resources owned or controlled by a business, individual, or entity that are expected to provide future economic benefits.

Accounting Equation

A fundamental financial principle representing the balance between a company's assets, liabilities, and equity.