26.

Partners J, K, and L agree to share profit and loss in a 5:2:1 ratio respectively. If the partnership earned $4 million in net income, K would be paid $1 million.

A) True B) False

27.

When partnerships dissolve, all non-cash assets are sold and debts are paid.

A) True B) False

28.

GAAP requires the purchase of interest method be used to acccount for the admission of a new partner.

A) True B) False

29.

During liquidation, a loss on realization will create a capital deficiency.

A) True B) False

30.

Partners do not always have to agree on how to divide profit or loss.

A) True B) False