When a Partnership Is Insolvent and a Partner Has a Deficit

question 22

Multiple Choice

When a partnership is insolvent and a partner has a deficit capital balance, that partner is legally required to:

• A) declare personal bankruptcy.
• B) initiate legal proceedings against the partnership.
• C) contribute cash to the partnership.
• D) deliver a note payable to the partnership with specific payment terms.
• E) None of these. The partner has no legal responsibility to cover the capital deficit balance.

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Definitions:

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The ornate main entrance to the Cathedral of Chartres, France, featuring statues and carvings of biblical figures, characteristic of Gothic architecture.

Chartres

A city in France renowned for its Gothic Cathedral of Chartres, a masterpiece of French Gothic architecture.

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A style in architecture and art of the 11th and 12th centuries in Europe, characterized by semicircular arches, robust structures, and decorative arcading.