In the Computation of a Partner's Loss Absorption Power (LAP),which

question 14

Multiple Choice

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.

• A) I
• B) II
• C) Both I and II
• D) Neither I nor II

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