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In the computation of a partner's Loss Absorption Power (LAP) ,which of the following statements is incorrect?
I.The computation of LAPs for all partners allows cash to be distributed before all partnership assets have been sold and all creditors have been paid.
II.The computation of LAPs for all partners indicates the relative strength of each partner's net capital position so that available cash is distributed in respective loss-sharing ratios.
Present Value Factor
A number by which a future payment is multiplied to determine its present value.
Annuity
An economic scheme that delivers fixed periodic earnings to recipients, usually serving as financial support for those retired.
Payments
Transactions where a good or service is exchanged for monetary compensation.
Present Value
The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.
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