Brian, Kirk, and Jim Established a Partnership Firm with Equal

question 9

Multiple Choice

Brian, Kirk, and Jim established a partnership firm with equal capital contributions. However, Kirk provided additional contribution in the form of a loan to the company. Which of the following is true in this scenario?

• A) Brian can withdraw capital advances from the partnership.
• B) Jim and Brian can legally prevent Kirk from withdrawing advances from the partnership.
• C) Kirk and Brian can legally prevent Jim from withdrawing advances from the partnership.
• D) Jim can withdraw capital advances from the partnership.

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Definitions:

Liquidation

The process of closing a business, selling its assets to pay off debt, and distributing any remaining assets to shareholders or owners.

Realization

The process of converting non-cash assets into cash or recognizing revenue when it is earned and measurable, regardless of when cash is received.

Partnership Termination

The process of dissolving the business relationship between partners under the terms of a partnership agreement.

Income-Sharing Ratios

Ratios that determine how profits or losses are divided among business partners or stakeholders according to agreed terms.