Deck 16: Partnerships: Liquidation

Question 1

When is a partnership considered to be insolvent?
I.When the total of all partners' capital accounts results in a debit balance.
II.When at least one of the partners is personally insolvent.

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Answer 1

A

Question 2

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 4:2:1:3.
Based on the preceding information,what amount will be paid out to Bill upon liquidation of the partnership?

A)$0
B)$25,000
C)$11,667
D)$2,500

Answer 2

A

Question 3

The following condensed balance sheet is presented for the partnership of Finn,Gary,and Eugene who share profits and losses in the ratio of 2:4:4,respectively:

Assume that the partners decide to liquidate the partnership.If the other assets are sold for $600,000,how much of the available cash should be distributed to Finn?

A)$64,000
B)$84,000
C)$90,000
D)$110,000

Answer 3

A

Question 4

The following condensed balance sheet is presented for the partnership of Dunn,Lott,and Tyler who share profits and losses in the ratio of 7:2:1,respectively.

The partners agreed that the partnership would be liquidated after selling the other assets.All partners are personally insolvent.What would each of the partners receive if the other assets are sold for $70,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 5

The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
Based on the preceding information,the journal entry on the partnership's books to record distribution of stock to prior partners will include a debit to Wilfred,Capital for:

A)$140,000.
B)$91,700.
C)$86,700.
D)$126,700.

Question 6

According to UPA 1997,during partnership liquidation,loans the partners have made to the partnership have the same status as loans from third-party creditors.As a practical matter,most loans from partners:

A)are subordinated to third-party creditors.
B)have the same status as loans from third-party creditors.
C)are paid prior to third-party creditors.
D)None of the options are correct.

Question 7

The following condensed balance sheet is presented for the partnership of D,E,and F who share profits and losses in the ratio of 5:3:2,respectively:
The partners agreed to liquidate the partnership after selling the other assets.
Refer to the above information.If the other assets are sold for $280,000,how much should F receive upon liquidation?

A)$44,000
B)$50,000
C)$76,000
D)$90,000

Question 8

The balance sheet given below is presented for the partnership of Janet,Anton,and Millet:

The partners share profits and losses in the ratio of 5:3:2,respectively.The partners agreed to dissolve the partnership after selling the other assets for $50,000.On dissolution of the partnership,Janet should receive:

A)$0.
B)$80,000.
C)$10,000.
D)$30,000.

Question 9

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 3:2:1:4.
Based on the preceding information,what amounts will be distributed to Page and Larry upon liquidation of the partnership?

A)Option A
B)Option B
C)Option C
D)Option D

Question 10

The following condensed balance sheet is presented for the partnership of D,E,and F who share profits and losses in the ratio of 5:3:2,respectively:
The partners agreed to liquidate the partnership after selling the other assets.
Refer to the above information.If the other assets are sold for $80,000,and all partners are personally insolvent,how much should E receive upon liquidation?

A)$0
B)$6,000
C)$10,000
D)$20,000

Question 11

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 3:2:1:4.
Based on the preceding information,what amount will be paid out to Scott upon liquidation of the partnership?

A)$0
B)$2,500
C)$5,000
D)$6,429

Question 12

In order to avoid inequalities in the liquidation process the legal doctrine of setoff effectively treats loans from partners to the partnership as:

A)outside debt that can offset a deficit capital account balance.
B)inside debt that can offset a deficit capital account balance.
C)additional capital investments that can offset a deficit capital account balance.
D)additional capital investments that can offset a partnership loss.

Question 13

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 4:2:1:3.
Based on the preceding information,what amount will be paid out to Scott upon liquidation of the partnership?

A)$0
B)$2,500
C)$25,000
D)$65,000

Question 14

The following condensed balance sheet is presented for the partnership of H,I,and J who share profits and losses in the ratio of 4:3:3,respectively:
The partners agree to liquidate the partnership after selling the other assets.
Refer to the above information.If the other assets are sold for $140,000 and all partners are personally insolvent,how much should I receive upon liquidation?

A)$0
B)$2,000
C)$6,600
D)$22,000

Question 15

The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
Based on the preceding information,the journal entry on the partnership's books to record distribution of stock to prior partners will include a debit to Mike,Capital for:

A)$38,010.
B)$31,500.
C)$42,000.
D)$44,300.

Question 16

The following condensed balance sheet is presented for the partnership of H,I,and J who share profits and losses in the ratio of 4:3:3,respectively:
The partners agree to liquidate the partnership after selling the other assets.
Refer to the above information.If the other assets are sold for $200,000,how much should J receive upon liquidation?

A)$50,000
B)$30,000
C)$20,000
D)$15,000

Question 17

The CRT partnership has decided to terminate operations and to liquidate the partnership assets.There are no partner loans,and all partners have positive capital balances.Gains and losses on liquidation and cash distributions to partners should be allocated as follows:

A)Option A
B)Option B
C)Option C
D)Option D

Question 18

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 4:2:1:3.
Based on the preceding information,what amount will be distributed to Page and Larry upon liquidation of the partnership?

A)Option A
B)Option B
C)Option C
D)Option D

Question 19

Bill,Page,Larry,and Scott have decided to terminate their partnership.The partnership's balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership,the other assets are sold for $150,000 and the accounts payable are paid.Page and Larry are personally solvent,but Bill and Scott are personally insolvent.The partners share profits and losses in the ratio of 3:2:1:4.
Based on the preceding information,what amount will be paid out to Bill upon liquidation of the partnership?

A)$0
B)$5,000
C)$25,000
D)$2,500

Question 20

The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
Based on the preceding information,the journal entry on the partnership's books to record the Investment in W&M Corporation Stock will be debited for:

A)$181,000
B)$131,000
C)$200,000
D)$150,000

Question 21

Tom,Dick,and Harry are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All partnership liabilities have been settled and all the partners are personally insolvent.The machinery has a book value of $65,000,and the partners have capital account balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $13,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 22

Tom,Dick,and Harry are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All partnership liabilities have been settled and all the partners are personally insolvent.The machinery has a book value of $65,000,and the partners have capital account balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $45,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 23

Partners Dennis and Lilly have decided to liquidate their business.The following information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Lilly at the end of the first month?

A)$24,000
B)$40,000
C)$16,000
D)$64,000

Question 24

Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.How much cash will be distributed to David at the end of the second month?

A)$75,000
B)$60,000
C)$41,250
D)$33,750

Question 25

Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payment schedule,how much cash will be distributed to Goliath at the end of the first month?

A)$7,500
B)$25,000
C)$47,500
D)$72,500

Question 26

Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payment schedule,how much cash will be distributed to David at the end of the first month?

A)$22,500
B)$42,500
C)$75,000
D)$117,500

Question 27

In the computation of a partner's Loss Absorption Potential (LAP),the individual partner's capital balance and profit-and-loss percentage are used in which of the following ways?

A)Option A
B)Option B
C)Option C
D)Option D

Question 28

Partners Dennis and Lilly have decided to liquidate their business.The following information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Lilly at the end of the second month?

A)$27,000
B)$36,000
C)$18,000
D)$0

Question 29

The capital balances,prior to the liquidation of the XYZ partnership,were as follows:

X,Y,and Z share profits and losses in the ratio of 5:3:2.As a result of a loan,the partnership owes Y $80,000.Using the information above,which partner has the highest Loss Absorption Potential (LAP)prior to liquidation?

A)X
B)Y
C)Z
D)Both X and Y

Question 30

On December 1,20X9,the partners of Tim,Williams,and Levin,who share profits and losses in the ratio of 4:4:2,decided to liquidate their partnership.On this date the partnership condensed balance sheet was as follows:

On December 11,20X9,the first cash sale of other assets with a carrying amount of $200,000 realized $140,000.Safe installment payments to the partners were made on the same date.How much cash should be distributed to each partner?

A)Option A
B)Option B
C)Option C
D)Option D

Question 31

Siera,Lani,and Cecilia are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2,respectively.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All the partners are personally insolvent.The machinery has a book value of $90,000,and the partners have capital balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $21,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 32

Partners Dennis and Lilly have decided to liquidate their business.The following information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided.Assume instead that the remaining inventory was sold for $10,000 in the second month.What payments will be made to Dennis and Lilly at the end of the second month?

A)Option A
B)Option B
C)Option C
D)Option D

Question 33

The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
Based on the preceding information,the journal entry on W & M Corporation's books to record the assets and the issuance of the common stock will include a credit to Additional Paid-In Capital for:

A)$0.
B)$81,000.
C)$31,000.
D)$50,000.

Question 34

Siera,Lani,and Cecilia are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2,respectively.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All the partners are personally insolvent.The machinery has a book value of $90,000,and the partners have capital balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $14,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 35

Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.How much cash will be distributed to Goliath at the end of the second month?

A)$11,250
B)$13,750
C)$20,000
D)$25,000

Question 36

Partners David and Goliath have decided to liquidate their business.The following information is available:
David and Goliath share profits and losses in a 3:1 ratio,respectively.During the first month of liquidation,half the inventory is sold for $70,000,and $50,000 of the accounts payable are paid.During the second month,the rest of the inventory is sold for $55,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Assume instead that the remaining inventory was sold for $20,000 in the second month.What payments will be made to David and Goliath at the end of the second month?

A)Option A
B)Option B
C)Option C
D)Option D

Question 37

Partners Dennis and Lilly have decided to liquidate their business.The following information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the second month?

A)$18,000
B)$27,000
C)$36,000
D)$60,000

Question 38

Tom,Dick,and Harry are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All partnership liabilities have been settled and all the partners are personally insolvent.The machinery has a book value of $65,000,and the partners have capital account balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $1,100?

A)Option A
B)Option B
C)Option C
D)Option D

Question 39

Partners Dennis and Lilly have decided to liquidate their business.The following information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio.During the first month of liquidation,half the inventory is sold for $60,000,and $60,000 of the accounts payable is paid.During the second month,the rest of the inventory is sold for $45,000,and the remaining accounts payable are paid.Cash is distributed at the end of each month,and the liquidation is completed at the end of the second month.
Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the first month?

A)$64,000
B)$60,000
C)$24,000
D)$36,000

Question 40

Siera,Lani,and Cecilia are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners.They share profits and losses in a ratio of 5:3:2,respectively.They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery.All the partners are personally insolvent.The machinery has a book value of $90,000,and the partners have capital balances as follows:
Each of the following is an independent case.
Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $60,000?

A)Option A
B)Option B
C)Option C
D)Option D

Question 41

On a partner's personal statement of financial condition,how are assets valued?

A)Historical cost
B)Book value
C)Discounted value
D)Estimated current value

Question 42

On December 31,20X8,Mr.and Mrs.Williams owned a parcel of land held as an investment.The land was purchased for $40,000 in 20X6,and was encumbered by a mortgage with a principal balance of $30,000 at December 31,20X8.On this date the fair value of the land was $75,000.In the Williams' December 31,20X8,personal statement of financial condition,at what amount should the land investment and mortgage payable be reported?

A)Option A
B)Option B
C)Option C
D)Option D

Question 43

Which of the following items are important in the determination of safe installment payments to partners?
I.Deficits created in capital accounts are distributed to the remaining partners.
II.All unsold noncash assets are assumed to be worthless.

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question 44

When Disney and Charles decided to incorporate their partnership,the trial balance was as follows:

The partnership's books will be closed,and new books will be used for D & C Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:

2.All assets and liabilities are transferred to the corporation.
3.The common stock is $5 par.Disney and Charles receive a total of 24,000 shares.
4.Disney and Charles share profits and losses in the ratio 6:4.
Required:
a.Prepare the entries on the partnership's books to record (1)the revaluation of assets, (2)the transfer of the assets to the D & C Corporation and the receipt of the common stock,and (3)the closing of the books.
b.Prepare the entries on D & C Corporation's books to record the assets and the issuance of the common stock.

Question 45

Which of the following statements is (are)true?
I.In the calculation of the loss absorption potential for a partner,a partner's loan balance (an amount that is owed by the partnership)should be added to the partner's capital balance.
II.In liquidation,a partner's loan balance (an amount that is owed by the partnership)should be paid to the partner as a creditor of the partnership after the outside creditors.

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question 46

The BIG Partnership has decided to liquidate at December 31,20X8.The capital and loan balances of the partners at December 31,20X8,are provided below:

If you were to calculate the Loss Absorption Potential for each partner,how would the partners rank (from highest to lowest LAP)?

A)B,I,G
B)I,B,G
C)B,G,I
D)G,I,B

Question 47

The JKL partnership liquidated its business in 20X9.Due to an expected long liquidation period,a cash distribution plan was developed.The initial sale and realization of cash from noncash assets resulted in partner K properly getting $24,000.No other partners received cash along with K.Based upon this information,which of the following statements is correct?
I.K's loss absorption potential (LAP)was higher than J's LAP and L's LAP.
II.K's capital balance was substantially larger than the balances of J and L.

A)I only
B)II only
C)Either I or II
D)Neither I nor II

Question 48

On a partner's personal statement of financial condition,how should liabilities be valued?
I.Present value
II.Lower of present value or cash settlement amount

A)I
B)II
C)Both I and II
D)Neither I nor II

Question 49

On a partner's personal statement of financial condition,assets and liabilities are presented:
I.As current and noncurrent.
II.In order of liquidity and maturity.

A)I
B)II
C)Both I and II
D)Neither I nor II

Question 50

The personal financial statements of a partner include which of the following?
I.Statement of financial condition.
II.Statement of changes in net worth.
III.Statement of cash flows.

A)I and II
B)I and III
C)II and III
D)I,II,and III

Question 51

On a partner's personal statement of changes in net worth,what type(s)of income is (are)recognized?
I.Realized
II.Unrealized

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question 52

A partnership may be involved in "Dissociation" or "Dissolution."
Required:
Describe "Dissociation" and "Dissolution."

Question 53

During the liquidation of the FGH partnership,a cash distribution was made to all the partners,who share profits and losses 60 percent,20 percent,and 20 percent,respectively.Assuming that the cash distribution referred to was made properly,how much would G receive if an additional $60,000 was distributed?

A)$60,000
B)$20,000
C)$17,000
D)$12,000

Question 54

Listen and Hear are thinking of dissolving their partnership.Listen has a friend who told him to complete a "lump-sum" liquidation.Hear wants to complete an "installment" liquidation.They have come to you for advice.What do you recommend and Why?

Question 55

When a partnership is liquidated on a piecemeal basis and cash has been distributed properly to all partners as noncash assets have been turned into cash,all future cash distributions should be made:
I.In the profit and loss ratio.
II.According to the balances in the partners' capital accounts.

A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question 56

The computation of a safe installment payment for the XYZ partnership resulted in only partner Z receiving cash.Which of the following statements is correct?
I.Partner Z lent the partnership cash,and the partnership had to pay back the loan to Z before distributing cash to X and Y.
II.After assuming all noncash assets were potentially worthless and that assumed capital deficits created in X's and Y's capital balances were losses to be allocated to Z;Z's capital balance was the only capital balance left with a credit.

A)I only
B)II only
C)Either I or II
D)Neither I nor II

Question 57

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.

Question 58

In the computation of a partner's Loss Absorption Potential (LAP),which of the following statements is incorrect?
I.The computation of LAPs for all partners allows cash to be distributed before all partnership assets have been sold and all creditors have been paid.
II.The computation of LAPs for all partners indicates the relative strength of each partner's net capital position so that available cash is distributed in respective loss-sharing ratios.

A)I
B)II
C)Both I and II
D)Neither I nor II