Which of the Following Statements About the Liquidation of a Partnership

question 16

Multiple Choice

Which of the following statements about the liquidation of a partnership is TRUE?

• A)The final cash distribution is always based on equal shares.
• B)The final cash distribution is always based on the profit sharing formula specified in the partnership agreement.
• C)The final cash distribution is based on the partners' capital account balances.
• D)Gains and losses from the disposal of assets are always distributed to the partner's capital accounts based on their respective percentage of total capital.

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Definitions:

Present Value Index

A financial metric used to evaluate the present value of future cash flows in relation to the initial investment, also known as the profitability index.

Compound Interest

The method of calculating interest where both the original principal and the accumulated interest from past periods on a loan or deposit are considered.

Estimated Cost

Estimated cost refers to the projection or approximation of the cost associated with a particular project, product, or service.

Straight-Line Depreciation

A method of depreciation where an equal amount of depreciation is allocated each year over the useful life of the asset.