On dissolution, the final distribution of cash to partners is based on?

On dissolution of a partnership, the partners may decide to liquidate the assets of the business and distribute the proceeds to the partners. The final distribution of cash to the partners is based on the capital balances of the partners. The capital balance represents the amount of capital that each partner has invested in the business, plus or minus any adjustments for profits or losses. The capital balances are calculated by subtracting each partner's share of the partnership's liabilities from their share of the partnership's assets. Once the capital balances have been determined, the remaining cash is distributed to the partners in proportion to their capital balances. This means that partners with higher capital balances will receive a larger share of the remaining cash, while partners with lower capital balances will receive a smaller share. Therefore, the correct answer is "capital balances". This reflects the fact that the final distribution of cash to the partners is based on the amount of capital each partner has invested in the business.