Which of the Following Statements Is True Concerning the Distribution

question 45

Multiple Choice

Which of the following statements is true concerning the distribution of safe payments?

• A) The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership.
• B) Safe payments are equal to the recorded capital balances of partners with positive capital balances.
• C) The distribution of safe payments may only be made after all liabilities have been paid.
• D) In computing safe payments, partners with positive capital balances are assumed to absorb an equal share of any deficit balance(s).
• E) There are no safe payments until the liquidation is complete.

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Definitions:

Bonds Outstanding

The total amount of bonds that have been issued by a corporation or government entity that remain unpaid.

Retirement Entry

An accounting entry that records the removal of fixed assets or inventory from the company's records upon their disposal or sale.

Discount On Bonds Payable

The difference between the face value of a bond and its selling price when a bond is sold for less than its face value.