Asked by Jessica Sheppard on May 11, 2024
Verified
The distribution of cash to partners in a partnership liquidation is always made based on the partners' income sharing ratio.
Income Sharing Ratio
Income sharing ratio refers to the pre-agreed proportion used to distribute profits or losses among partners in a partnership according to their partnership agreement.
- Familiarize yourself with the procedures for establishing bonuses and distributing cash during the liquidation phase of partnerships.
Verified Answer
KG
Kanika GoinsMay 17, 2024
Final Answer :
False
Explanation :
The distribution of cash in a partnership liquidation is primarily based on the partnership agreement, which may specify different ratios for liquidation distributions than for income sharing. If the agreement does not specify, distributions are made according to the partners' capital account balances after liabilities are paid, not necessarily their income sharing ratio.
Learning Objectives
- Familiarize yourself with the procedures for establishing bonuses and distributing cash during the liquidation phase of partnerships.
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