Which of the following procedures is acceptable when accounting for a deficit balance in a partner's capital account during partnership liquidation,if the partner with a negative capital balance is personally insolvent?
A) The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to zero.
B) The negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to all the partners.
C) The negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to those partners having positive balances.
D) The partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to the same level of the other partners' capital accounts.
Correct Answer:
Verified
Q2: Which statement is correct in describing the
Q3: The year-end balance sheet and residual profit
Q3: How much cash would Baker receive from
Q5: Q6: In partnership liquidations,what are safe payments? Q7: What is the proper disposition of a Q9: A simple partnership liquidation requires Q12: If conditions produce a debit balance in Q14: Gains and losses incurred at liquidation are Q17: Which partner is considered the most vulnerable
A)The amounts
A)periodic payments to
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents