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If upon liquidation a partner has a debit balance in their capital account, what must they do?

User Cycero
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Final answer:

Upon liquidation, a partner with a debit balance in their capital account must pay back the owed amount to bring their account balance to zero.

Step-by-step explanation:

If upon liquidation a partner has a debit balance in their capital account, it indicates that the partner owes money to the partnership.

The partner is required to pay back the amount necessary to bring their capital account balance to zero. This may involve the partner contributing additional personal assets or funds to the partnership to settle their negative balance. Failure to do so may result in legal ramifications, as the partnership agreement often holds partners personally liable for their share of any partnership debts. If the partner is unable to pay, the remaining partners may have to cover the deficit.

User Gayathri L
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