Concept explainers
Installment liquidation: It typically requires several months to complete liquidation, it includes installment, payments to partners during liquidation period because they require funds for the personal purposes. Most liquidations take place over an extended period in order to obtain the large possible amount from the realization of the assets. Some
Installment liquidations involve distributing cash to partners before complete liquidation of assets occurs. To ensure fairness in making cash distributions a schedule of safe payments to partners and the cash distribution plan is followed.
To choose:Correct answer and show how final cash distribution to the partners is done.
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Advanced Financial Accounting
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- In accounting for the lump-sum liquidation of a partnership, cash payments to partners after all non-partner creditors’ claims have been satisfied, but before the final cash distribution should be according to: a. Safe payment computations. b. The final balances in partner capital accounts. c. The partners’ relative profit and loss sharing ratio. d.The partners’ relative share of the gain or loss on liquidation.arrow_forwardChoose the correct. If a partnership is liquidated, how is the final allocation of business assets made to the partners?a. Equally.b. According to the profit and loss ratio.c. According to the final capital account balances.d. According to the initial investment made by each of the partners.arrow_forwardIn a partnership liquidation, the final cash distribution to the partners should be made in accordance with the?arrow_forward
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