In a liquidation, a. gains or losses are distributed according to the partnership agreement. b. assets may be sold at amounts that differ from their original cost. c. the business will not continue. d. All of these choices may occur.

Question

Mia Dickerson

Business

14 November, 14:23

In a liquidation, a. gains or losses are distributed according to the partnership agreement. b. assets may be sold at amounts that differ from their original cost. c. the business will not continue. d. All of these choices may occur.

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Shelby Sparks · Answer 1

D

Explanation:

Liquidation is when the business closes down or dissolves which means the business will not continue any further. Firstly all the assets are sold at their market value which differs from the actual cost or the book value and all the liablities are paid for (or compensated for). After paying all the due balances and receiving all receivables the gain or loss is divided amongst the partners according to their partnership agreement which states the profit/loss sharing ratio. in case of no agreement, the profit/loss is shared equally.