Asked by Sameeha Riptee on Jul 04, 2024
Verified
When a partnership terminates business the sale of noncash assets is called
A) liquidation.
B) realization.
C) recognition.
D) disposition.
Noncash Assets
Assets that are not in the form of cash or easily convertible to cash, such as equipment, real estate, and intellectual property.
Liquidation
The process of closing a business, selling its assets to pay off debt, and distributing any remaining assets to shareholders or owners.
Realization
The process of converting non-cash assets into cash or recognizing revenue when it is earned and measurable, regardless of when cash is received.
- Distinguish between the different types of contributions (capital and loans) and withdrawals (drawings) within a partnership.
Verified Answer
SQ
Salma QureshiJul 07, 2024
Final Answer :
B
Explanation :
The sale of noncash assets when a partnership terminates business is called realization. Liquidation refers to the process of settling all debts and distributing remaining assets, recognition refers to accounting for assets and liabilities on financial statements, and disposition refers to the process of transferring ownership of an asset.
Learning Objectives
- Distinguish between the different types of contributions (capital and loans) and withdrawals (drawings) within a partnership.