Final answer:
The first step in partnership liquidation is the sale of non-cash assets, which are converted into cash for the settlement of liabilities and distribution to partners.
Step-by-step explanation:
The first step in a partnership liquidation is c) Sale of non-cash assets. This step involves converting the partnership's non-cash assets into cash, which can then be used to settle any liabilities. The process starts by selling off these assets, followed by other liquidation steps such as paying off liabilities and distributing the remaining assets to partners. It's important to record any gains or losses from the sale of assets, as these will affect the individual capital accounts of the partners before final distributions are made. As the last step, any remaining cash after the payment of liabilities is distributed to the partners based on their respective shares in the partnership.