Partner A has a smaller capital balance than Partner L.Partner A,however,has a higher profit-and-loss-sharing percentage than Partner L.The LA partnership has decided to liquidate.As a result of the information given,

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Since Partner A has a higher profit-and-loss-sharing percentage than Partner L, they will be entitled to a larger share of the liquidation proceeds. However, Partner A's smaller capital balance means that they will have a lower loss absorption potential than Partner L. Therefore, Partner L will be able to bear more of the losses in the liquidation process. Option A is incorrect because it suggests that Partner L will have a smaller loss absorption potential than A, which is not true. Option B is also incorrect because the distribution of cash in a partnership liquidation is based on the partners' capital balances, not their profit-and-loss-sharing percentages. Option D is incorrect because all partners are entitled to a share of the cash in a partnership liquidation, although the amounts received may differ based on their capital balances and profit-and-loss-sharing percentages.

Partner a Has a Smaller Capital Balance Than Partner L