🔑Partnership liquidation occurs when a partnership goes out of business or ceases to exist for other reasons.
💼The steps in the liquidation process include the sale of assets, division of gains or losses, payment of liabilities, and final distribution to the partners.
💰During partnership liquidation, the partners' capital accounts are closed, and any remaining cash is distributed according to their capital account balances.
💡If the assets are sold at a loss during the liquidation process, the partners will share the loss based on their distributive share.
📄A statement of partnership liquidation provides a visual summary of the liquidation process, reconciling the realization process with the other steps.