A capital deficiency exists when at least one partner has a debit balance in his or her capital account at the point of final cash distribution during liquidation.

Question

Quizplus · Accepted Answer

This is the definition of a capital deficiency in a partnership. It means that one or more partners owe more to the partnership than they have contributed, resulting in a negative balance in their capital account.

A Capital Deficiency Exists When at Least One Partner Has