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 capital 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.

---

Definitions:

Testimonial

A formal statement or written declaration testifying to someone's character, qualifications, or the quality of a product or service.

Modest Persona

A representation or character that displays humility and does not seek excessive attention, often used in literary or theatrical contexts to depict virtue.

Culture

The social behavior, norms, knowledge, beliefs, arts, laws, customs, and any other capabilities and habits acquired by people as members of a society.

Pond Preparation

The process of setting up or conditioning a pond environment for a specific purpose, such as habitation by aquatic life.