Question

Partner A has a smaller capital balance than Partner L. Partner A, however, has a higher profit-and-loss-sharing percentage than Partner L. The LA partnership has decided to liquidate. As a result of the information given, A) Partner L will have a smaller loss absorption potential than A. B) Partner L will receive cash only after A has received cash. C) Partner A will have a smaller loss absorption potential than L. D) Partner A will never receive any cash from partnership liquidation

Answer 1

Answer:

(C) Partner A will have a smaller loss absorption potential than L