Which of the Following Occurs Upon Dissolution of a Partnership

question 34

Multiple Choice

Which of the following occurs upon dissolution of a partnership when liabilities of the partnership are greater than the liquidated assets of the partnership?

• A) The liabilities remain unpaid because the partners are not liable.
• B) The managing partner is liable for the liabilities, but other partners are not liable.
• C) Each partner must contribute his or her share of the losses to pay creditors.
• D) Only partners who did not participate in the management of the business must contribute his or her share of the losses to pay creditors.
• E) Only partners who participated in management of the business must contribute his or her share of the losses to pay creditors.

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Definitions:

Earnings Rate

The rate at which an investment or savings account generates income over a specific period of time.

Net Present Value

A financial metric that estimates the profitability of investments by calculating the difference between the present value of cash inflows and outflows over a period of time.

Capital Investment Proposals

Capital investment proposals are plans or suggestions submitted for consideration to undertake significant spending on projects expected to generate future returns.

Expected Future Net Cash Flows

The projection of cash receipts minus cash payments over a future period, considering all expected future transactions.