During a Partnership Liquidation, How Are Gains and Losses Recorded

question 45

Multiple Choice

During a partnership liquidation, how are gains and losses recorded?

• A) Accrued in Other Comprehensive Income.
• B) Accrued in a Liquidation Gain/Loss account.
• C) Directly to Retained Earnings.
• D) Directly to the partners' capital accounts, allocated equally.
• E) Directly to the partners' capital accounts, allocated on the partners' profit and loss ratio.

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Definitions:

Mandatory Indirect Pay

Required compensation benefits provided by employers, such as social security contributions and unemployment insurance, that are not part of direct wages.

Medical Coverage

An insurance benefit that covers the cost of an individual's healthcare needs, usually provided by employers or purchased individually.

Workers' Compensation

Insurance that provides financial benefits and medical care to employees who are injured or become ill as a direct result of their job.

Profit Sharing

An employee benefit scheme where a portion of a company's profits is distributed to the employees, strengthening their investment in the company's success.