Liquidation in a partnership refers to ________.
A) increasing the investment in highly liquid assets
B) shutting down the business by selling its assets and paying its liabilities
C) the admission or withdrawal of a partner that dissolves the partnership
D) purchase of another partnership firm which is operating in the same business

Question

Quizplus · Accepted Answer

Liquidation in a partnership usually means closing down the business and selling off its assets to pay off the debts and liabilities. It is generally considered as the last resort when the business is not generating sufficient profits or it is unable to meet its financial obligations. It is different from the admission or withdrawal of a partner, which usually results in a reconstitution of the partnership rather than its dissolution. Buying another partnership firm is also not considered as liquidation. Increasing investment in highly liquid assets may be a wise investment strategy, but it is not related to liquidation in a partnership.

Liquidation in a Partnership Refers to ________