Answered: 7. A deficient and insolvent partner…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

7. A deficient and insolvent partner will still have a chance to receive cash from the partnership if
a. there is a loan payable to him that is higher than the deficiency and insolvency of the partner.
b. there is a loan payable to him which is higher than his capital deficiency.
c. if he makes additional investment.
d. if the other partners will absorb his deficiency.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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