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In the preparation of a Cash Distribution Program, the loss absorption potential is a computed by dividing the partners' capital balances by his profit and loss percentage

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In the preparation of a Cash Distribution Program, the loss absorption potential is a computed by dividing the partners' capital balances by his profit and loss percentage. S2 The loss absorption potential is the maximum loss each partner can absorb and which can eliminate him from any cash distribution a.) S1 IS TRUE b.) S2 IS TRUE C) BOTH ARE TRUE d) BOTH ARE FALSE 2. Which will hold true in case a partner's share in loss on realization exceeds the partner's capital balance? a.) right of offset will be applied for any loan to partner balance b.) the partner is required to make additional investment, if the partner is solvent and is not a general partner c) loss absorplion will be applied to the other partners capital accounts if the deficient partner is a limited partner even if he is still personally solvent d) none of the above e) answer not given 3. Which slalement about capital stock transaction is to correct? a.) Tolal shareholders equily is increased by amount of cash received b.) Excess of par value over lait value of non-cash item received increases additional paid in capilal C.) Non cash consideration received is recorded at its fair value d.) Total shareholders equity is increased by the value of liability sel oll e.) None of the above