Which of the Following Is TRUE of a Liquidation of a Partnership

question 84

Multiple Choice

Which of the following is TRUE of a liquidation of a partnership?

• A) It allocates the gain or loss on sale of assets to the partners' capital accounts based on the profit-and-loss-sharing ratio.
• B) The remaining cash after paying all liabilities are paid to the partners based on their profit-and-loss-sharing agreement.
• C) Before a business is liquidated, its books should not be adjusted or closed.
• D) It involves the selling of short-term liquid assets and does not involve the sale of fixed assets.

---

Definitions:

Departmental Predetermined Rates

Specific overhead rates calculated for each department within a company, used to allocate indirect costs more accurately.

Machine-Hours

A measure of the total time that machines are operated within a specific period, used for allocating manufacturing overhead costs to products.

Manufacturing Overhead

The indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of maintenance, electricity, and equipment depreciation.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products, calculated before the start of a period.