Asked by Alejandra Quiroz on Apr 27, 2024
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If a partner's capital balance is a debit after it has absorbed its share of the loss on realization, the balance is referred to as a deficiency.
Capital Balance
The amount of equity a partner has in a partnership or an owner has in a business, reflecting the net value of their investment.
Deficiency
The debit balance in the owner’s equity account of a partner.
Absorbed
Pertains to costs that have been taken into account or integrated into the pricing of products or services, often in relation to overheads or other indirect expenses.
- Familiarize oneself with the methodology of partnership dissolution, notably the approach to cash distributions and the liabilities of partners for underfunded capital accounts.
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Learning Objectives
- Familiarize oneself with the methodology of partnership dissolution, notably the approach to cash distributions and the liabilities of partners for underfunded capital accounts.
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