A deficiency in the capital of an insolvent partner is A. a loss to the other partners B. a gain to the other partners C. the result of a loss in operations D. the result of a sale of non-cash assets at a gain

A deficiency in the capital of an insolvent partner is A. a loss to the other partners B. a gain to the other partners C. the result of a loss in operations D. the result of a sale of non-cash assets at a gain

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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Concept explainers

Partnership Accounting

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

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.

Question

A deficiency in the capital of an insolvent partner is

A. a loss to the other partners

B. a gain to the other partners

C. the result of a loss in operations

D. the result of a sale of non-cash assets at a gain

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