Which of the Following Procedures Is Acceptable When Accounting for a Deficit

question 21

Multiple Choice

Which of the following procedures is acceptable when accounting for a deficit balance in a partner's capital account during partnership liquidation,if the partner with a negative capital balance is personally insolvent?

• A)The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the apital account to zero.
• B)The negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to all the partners.
• C)The negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to those partners having positive balances.
• D)The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to the same level of the other partners' capital accounts.

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Definitions:

Divisional Structure

A type of organizational structure where operations are grouped based on distinct divisions or units, each focusing on a particular product line, market sector, or geographical area.

Coordination

The organized arrangement of group efforts and resources to achieve specific goals efficiently.

Functional Departments

Divisions within an organization structured around specific tasks or functions, such as marketing, finance, or operations.

Divisional Structures

An organizational structure where operations are divided into smaller, semi-autonomous units or divisions based on product, service, market, or geography.