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Li Ann Faith M. Bartolome

BSA 1-3

A. Look for the meaning of the following terms used partnership liquidation:

1. Capital deficiency  If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash.  A debit balance in a partner’s capital account after allocation of gain or loss  An insolvent estate is one where the debts exceed the value of the assets. In this instance, all the assets are sold off but cannot completely cover the debts. Creditors that are not paid will write-off the loss and your heirs won’t inherit anything because there’s nothing left to pass on. 2. Insolvent partner  A partner whose personal assets are less than his personal liabilities  The tests for an insolvent partnership are similar to the two generally accepted tests for an insolvent company. If a partnership is: unable to pay its debts as they fall due; or. its assets, when realised in cash, would be insufficient to pay off its debts and other liabilities.  In legal terminology, the situation where the liabilities of a person or firm exceed its assets. In practice, however, insolvency is the situation where an entity cannot raise enough cash to meet its obligations, or to pay debts as they become due for payment.

3. Right of offset  Most banks have the right to transfer cash from your bank or savings accounts to pay off other debts held with them, such as credit cards or loans. It is known as the right to “'set-off”, or to combine accounts.  The legal right of a bank to seize deposited funds to cover a loan that is in default

 Engaging in the business of keeping money for savings and checking accounts or for exchange orfor issuing loans and credit etc.

4. Solvent partner 

A partner whose personal assets are more than his personal liabilities

 If a person or a company is solvent, they have enough money to pay all their debts

 Solvent means that there are still assets left over after all the debts have been paid. These assets are then distributed to the heirs as outlined in your Will or if there is no Will, in accordance with state law.

Capital deficiency

1. Capital deficiency:

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Insolvent partner is Offset

What is the right to offset? Solvent partner EDIT COMMENTS (1) SHARE

Solvent partner is...