When a Partnership Is Liquidated on a Piecemeal Basis and Cash

question 39

Multiple Choice

When a partnership is liquidated on a piecemeal basis and cash has been distributed properly to all partners as noncash assets have been turned into cash,all future cash distributions should be made:
I.In the profit and loss ratio.
II.According to the balances in the partners' capital accounts.

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

---

Definitions:

Ledger Accounts

Records that summarize all the transactions related to a particular aspect of a business's finances, such as assets, liabilities, equity, revenue, and expenses.

Unearned Revenues

Income received by a company for goods or services yet to be delivered or performed, considered a liability until earned.

Revenues

The total income generated by a company from its normal business operations, before any expenses are subtracted.

Debits

Entries made on the left-hand side of an account, representing an increase in assets or expenses or a decrease in liabilities, equity, or revenue.