Which of the Following Statements Is Correct Regarding a Partner's

question 10

Multiple Choice

Which of the following statements is correct regarding a partner's debit capital balances in a liquidation?

• A)The partner should make contributions to reduce the debit balance to whatever extent possible.
• B)If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance based on their proportionate profit-and-loss-sharing percentages.
• C)Partners who absorb another's debit capital balance have a legal claim against the deficient partner.
• D)All of these statements are correct.

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Definitions:

Proprietor's Income

Represents the earnings of the owner of a business, factoring in revenue minus expenses and taxes.

Unincorporated Enterprises

Businesses that are not legally separated from their owners, meaning the owner is personally liable for the debts of the business.

Corporate Executives

High-ranking officials within a corporation, responsible for making strategic decisions.

Total Income

The sum of all earnings or revenue received by an individual or an entity, including wages, profits, rents, and other forms of earnings.