Which One of the Following Statements Is Correct

question 60

Multiple Choice

Which one of the following statements is correct?

• A) If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed by the other partners in the profit and loss ratio of those partners.
• B) Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account balances absent an alternate income-sharing plan stated in the partnership agreement.
• C) A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan.
• D) Partners may not receive any cash before partnership creditors receive cash when liquidating a partnership.
• E) All cash payments to partners are made using their profit and loss ratio when liquidating the partnership.

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Definitions:

Limit Production

A strategy or policy implemented to restrict the quantity of goods produced, often to maintain prices or conserve resources.

Predatory Pricing

The practice in which a company prices one product below normal cost until competitors are eliminated and then it sharply increases the price.

Spirit Airlines

A low-cost carrier in the United States known for offering budget-friendly air travel options.

Northwest Airlines

A major airline based in the United States that operated until it merged with Delta Airlines in 2010.