Which of the Following Statements Is True Concerning the Distribution

question 14

Multiple Choice

Which of the following statements is true concerning the distribution of safe payments?

• A) The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership.
• B) Safe payments are equal to the recorded capital account balances of those partners with capital account balances in excess of $0.
• C) The distribution of safe payments may only be made after all liabilities have been paid.
• D) In computing safe payments, partners with positive capital account balances are assumed to absorb an equal share of any deficit balance(s).
• E) There are no safe payments until the liquidation is complete.

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Definitions:

Market Value

The present cost at which a service or asset is available for purchase or sale in a market setting.

Replacement Cost

The current cost to replace an asset with a similar one of equivalent utility and quality, without considering depreciation.

Selling Price

The amount of money for which a product or service is sold to customers.

Insurance Expense

Insurance expense refers to the cost incurred by an entity to obtain coverage against various risks, recorded as an expense in the financial statements.