In the Final Step of the Liquidation Process Remaining Cash

question 190

Multiple Choice

In the final step of the liquidation process remaining cash is distributed to partners

• A) on an equal basis.
• B) on the basis of the income ratios.
• C) on the basis of the remaining capital balances.
• D) regardless of capital deficiencies.

---

Definitions:

Split-Off Point

The stage in production at which multiple products derived from a common input process become separately identifiable, and costs are then attributed accordingly.

Joint Products

Products that are produced from the same process or raw materials, often with little to no variation in cost until the split-off point, where they may be further processed differently.

Net Realizable Value Method

An accounting method used to value inventory or accounts receivable at the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Market Value at Split-Off Method

A method used to allocate joint costs based on the market value of products at the point of separation in a production process.