If a partnership agreement provides that capital balances are to be maintained in accordance with the profit and loss ratio, then a partner cannot ever be put in the position of having to absorb more than his or her share of the liquidation losses.

Question

Quizplus · Accepted Answer

The allocation of liquidation losses according to the profit and loss ratio does not prevent a partner from absorbing more than their share of losses if other partners are unable to meet their obligations, leading potentially to one partner covering more than their initial share of losses.

If a Partnership Agreement Provides That Capital Balances Are to Be