When a Partner Is Unable to Pay a Capital Deficiency

question 32

Multiple Choice

When a partner is unable to pay a capital deficiency:

• A)The partner must take out a loan to cover the deficient balance.
• B)The deficiency is absorbed by the remaining partners.
• C)The partnership ends.
• D)The deficient partner has no personal liability to pay the deficiency.
• E)The partnership must be liquidated.

---

Definitions:

Listed Public Company

A corporation whose shares are traded on a public stock exchange, allowing for widespread ownership by investors.

Protective Rights

Rights granted to minority shareholders or debt holders to protect their interest, which may include veto powers on major corporate actions.

Capital Expenditure

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Lender

An individual, financial institution, or entity that provides funds to another with the expectation that the funds will be repaid with interest.