Question

If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the deficiency is allocated to the partners with credit balances:

A. equally.
B. on the basis of their income ratios.
C. on the basis of their capital balances.
D. on the basis of their original investments.

Answer 1

Option "B" is the correct answer to the following statement.

Based on their income ratio.

Explanation:

Capital shortfall implies that at the time of final fund payment one or more parties have a negative deficit in the capital account.

The measure is calculated as a percentage and it is used by borrowers to assess how well we are handling monthly loans and whether we can afford to pay a loan. Creditors regard as customers with higher risk percentages as more vulnerable lenders because they may create problems paying back their mortgage in the case of financial issues.