The Liquidation of a Partnership Is a Process Containing the Following

question 168

Multiple Choice

The liquidation of a partnership is a process containing the following steps: 1. Pay partnership liabilities in cash.
2) Allocate the gain or loss on realization to the partners based on their profit ratios.
3) Sell noncash assets for cash and recognize a gain or loss on realization.
4) Distribute remaining cash to partners on the basis of their remaining capital balances.
Identify the proper sequencing of the steps in the liquidation process.

• A) 3, 2, 4, 1
• B) 3, 2, 1, 4
• C) 1, 3, 2, 4
• D) 1, 4, 3, 2

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Definitions:

Indorse

To sign the back of a financial instrument, such as a check, to make it payable to someone other than the original payee or to endorse a document formally.

Payee

The party in a financial transaction who receives the payment.

Negotiating

Negotiating involves discussing terms and conditions with the goal of reaching an agreement or compromise on matters of business, trade, or interpersonal issues.

Dishonored

A term referring to a financial instrument, such as a check, that has been refused payment by the bank upon presentation.