Question

A partnership liquidation occurs when a.a new partner is admitted b.the ownership interest of one partner is sold to a new partner c.a partner dies d.the assets are sold, liabilities paid, and business operations terminated

Answer 1

Answer:

Correct answer is d, the assets are sold, liabilities paid and business operations terminated

Explanation:

The partnership liquidation occurs when the day-to-day operation is closed for good. Part of liquidation's process is to sold the partnership's assets and paid all creditors (outside and partners) and divide the excess to the partners based on the profit and loss ratio or if there is still existing obligation to the creditors, the partners will pay it using their personal assets (applicable to general partner only). This stage, the life of the partnership ceased to exist.