If a Partner Makes a Cash Advance to a Partnership

question 61

Multiple Choice

If a partner makes a cash advance to a partnership to be repaid in five years time and does not wish it to be included as a capital contribution, how will it be classified in the balance sheet?

• A) Current liability
• B) Non-current asset
• C) Non-current liability
• D) Current asset

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Definitions:

Channel Member

An entity (e.g., manufacturer, distributor, retailer) that plays a role in the distribution and sale of goods and services in the supply chain.

Sells Directly

The practice of selling products or services directly to the customer, bypassing any intermediaries or third-party retailers.

Binding Arbitration

A legal process in which a dispute is resolved by an arbitrator’s decision, which is final and enforceable by law, with no option for appeal.

Vertical Conflict

A type of conflict that occurs between different levels of the same channel, for example, disputes between a manufacturer and its wholesaler or retailer.