The following is the priority sequence in which liquidation proceeds will be distributed for a partnership

Answer

		partnership drawings, partnership liabilities, partnership loans, partnership capital balances
		partnership liabilities, partnership loans, partnership capital balances
		partnership liabilities, partnership loans, partnership drawings, partnership capital balances
		partnership liabilities, partnership capital balances, partnership loans

1.

Which of the following statements is correct regarding a partner's debit capital balances?

Answer

		The partner should make contributions to reduce the debit balance to whatever extent possible
		If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance based on their proportionate profit-and-loss-sharing percentages
		Partners who absorb another's debit capital balance have a legal claim against the deficient partner
		All of these statements are correct

1.

In a lump-sum liquidation of a partnership

Answer

		all assets are paid to the partners based on their initial contribution, with the oldest partnering being paid back first
		all assets are paid to the partners based on an equal distribution regardless of when the partner was admitted to the partnership
		all assets must be realized before any distribution can be made
		all assets are paid to the partners, at the same time, based the fair market value at the time they were initial donated to the partnership

1.

When a partner withdraws from a partnership and the remaining partners acquire that interest

Answer

		this may have an effect on the liquidity of the partnership
		this will increases the cash flow into the partnership
		this will always create goodwill for an amount equal to the withdrawing partner