Asked by Pamela Lorraine on Jul 20, 2024
Verified
The first step in the liquidation of a partnership is to
A) allocate a gain or loss on realization to the partners.
B) distribute remaining cash to the partners.
C) pay partnership liabilities.
D) sell noncash assets and recognize a gain or loss on realization.
Liquidation
The process of winding up a company's financial affairs by selling off its assets to pay creditors and distribute any remaining assets to the shareholders.
Partnership Liabilities
Debts and obligations for which partners in a business partnership are mutually responsible.
- Outline the steps and financial implications of partnership liquidation.
Verified Answer
AX
Aahsndkde XhdjmeJul 25, 2024
Final Answer :
D
Explanation :
The first step in the liquidation of a partnership involves selling noncash assets and recognizing any gain or loss on realization. This step is necessary to convert the partnership's assets into cash, which can then be used to settle liabilities and distribute any remaining amounts to the partners.
Learning Objectives
- Outline the steps and financial implications of partnership liquidation.