In a liquidation,the liabilities of the partnership should be paid
A)after a revaluation of assets
B)before any sales of assets
C)before the distribution of cash to partners
D)before the distribution of gains and losses on the disposal of assets

Question

Quizplus · Accepted Answer

When a partnership is being liquidated, priority must be given to paying off the liabilities of the partnership first. After that, the remaining cash can be distributed among the partners. Therefore, paying off the liabilities should occur before the distribution of cash to partners (option C) or the distribution of gains and losses (option D).  Revaluation of assets (option A) or sales of assets (option B) may occur at various stages of the liquidation process, but they do not affect the priority for paying off liabilities.

In a Liquidation,the Liabilities of the Partnership Should Be Paid