In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the:
- A) partners’ profit and loss sharing ratio.
- B) balances of the partners’ capital accounts.
- C) ratio of the capital contributions by the partners.
- D) ratio of capital contributions less withdrawals by the partners.
Please fully explain your answer.
:
In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
Answer
- B) balances of the partners’ capital accounts.
Explanation to Answer the above answer
partnership liquidation is a process of closing the entity and distributing its assets. First pay to secure creditor and then paid to unsecured creditor ,whatever final cash remains are paid to partners in the proportion of balances of the partners’ capital accounts.