17) Which of the following statements is correct regarding a partner's debit capital balance?

a) The partner should make contributions to reduce the debit balance to whatever

extent possible

b) If contributions are not possible, the other partners with credit capital balances

will be allocated a portion of the debit balance based on their proportionate profit- and-loss sharing
percentages

c) Partners who absorb another's debit capital balance have a legal claim against the

deficient partner

d) All of these statements are correct

18) If a partnership has only non-cash assets, all liabilities have been properly disbursed, and no
additional liquidation expenses are expected, the maximum potential loss to the

partnership in the liquidation process is

a) The fair market value of the non-cash assets

b) The book value of the non-cash assets

c) The estimated proceeds from the sale of the assets less the book value of the non- cash assets

d) None of the above

19) Which statement is correct in describing the rank order of payments as specified by the

Partnership Law?

a) Payments to partners with loans to the partnership are ranked equally with

payments to other creditors

b) Payments to partners with loans to the partnership are ranked ahead of payments

to partners without loans to the partnership

c) Payments to other creditors are ranked ahead of payments to partners with loans

to the partnership

d) After payments are made to other creditors and partners with loans to the

partnership, payment can be made to partners with capital interests

20) Which of the following procedures is acceptable when accounting for a deficit balance

in a partner’s capital account during partnership liquidation?

a) A partner with a negative capital balance must contribute personal assets to the
partnership that are sufficient to bring the capital account to zero

b) If a partner with a negative capital balance is personally insolvent, the negative

capital balance may be absorbed by those partners having a positive capital

balance according to the residual profit and loss sharing ratios that apply to all the

partners

c) If a partner with a negative capital balance is personally insolvent, the negative

capital balance may be absorbed by those partners having a positive capital

balance according to the residual profit and loss sharing ratios that apply to those

partners having positive balances

d) All the above procedures are acceptable

21) A partnership dissolution differs from a liquidation in that

a) Payments are made to creditors before partners receive value

b) Periodic payments to partners are made when cash becomes available

c) A partner withdraws from the business and the enterprise continues to function

d) Full payment is made to all outside creditors before remaining cash is distributed

to partners in a final lump sum payment