Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 10

During a liquidation, if a partner's capital account balance drops below zero, what should happen
a.The other partners file a legal suit against the partner with the deficit balance.
b.The partner with the highest capital balance contributes sufficient assets to eliminate the deficit.
c.The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses.
d.The partner with a deficit contributes enough assets to offset the deficit balance.