A capital deficiency means that: The partnership has a loss. The partnership has more liabilities than assets. At least one partner has a debit balance in his/her capital account. At least one partner has a credit balance in his/her capital account. The partnership has been sold at a loss.

A capital deficiency means that: The partnership has a loss. The partnership has more liabilities than assets. At least one partner has a debit balance in his/her capital account. At least one partner has a credit balance in his/her capital account. The partnership has been sold at a loss.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2MC: Any assets invested by a particular partner in a partnership ________. A. do not become a...

See similar textbooks

Related questions

Q: ) When the net assets of the partnership are fairly valued and the amount invested by the incoming…

A: solution note : as per the Q&A guideline we are required to answer the first question only .…

Q: A new partner is admitted to an existing partnership. As a result of admission, the capital balances…

A: Partnership is an association or agreement between two or more than two persons, in which they…

Q: If the proceeds from the sale of non – cash assets is less than the book value of the non – cash…

A: Cash (assets) ↑ Non – cash assets ↓ Loss on sale of Non – cash assets ↑

Q: Which of the following is an element of the requirement that partnership allocations must have…

A: ANSWER : Partnership allocations are the division of the partnership's things of income, gain, loss,…

Q: When a partner decides to withdraw or retire, he may sell his capital interest either to outsiders,…

A: Introduction: A business partnership is a legal connection created by a signed agreement between two…

Q: Which of the following is not a characteristic of a partnership? A. The partnership itself pays no…

A: A partnership can be started without any written articles of partnership. It is not mandatory to…

Q: In accounting for a withdrawal by payment from partnership assets, which statement is FALSE? O The…

A: Lets discuss the basics. Partnership is a agreement between two or more person who works together…

Q: When there is a capital deficiency, the effect is that Group of answer choices The liabilities and…

A: As per the guidelines, only one question is allowed to be answered. Please upload different…

Q: When there is a capital deficiecy, the effect is that a. the cash and other assets will also be…

A: Ans. Whenever there happens a case of capital deficiency, the assets are less as compared to the…

Q: partnership is less stable because it can easily disssolved. * What is the basis of capital sharing…

A: The partnership comes into existence when two or more persons comes together to do the business and…

Q: Which of the following is not correct with respect to an installment liquidation of a partnership?…

A: If actual expenses are not known, then the expected amount must be kept separately to meet actual…

Q: insolvent partner

A: A deficient and insolvent partner will still have a chance to receive cash from the partnership if…

Q: Which is NOT CORRECT when the Capital Adjustment account is used in the recording of partnership…

A: the capital account of partner according to the adjustment to the capital account shall be increased…

Q: A disadvantage that is NOT peculiar to the partnership form of organization includes a.the interest…

A: A partnership is a type of business that is held by two or more partners in order to earn profit.…

Q: When a partner retires from the partnership and is given more cash than his adjusted capital, how…

A: Solution: When a partner retires from the partnership and is given more cash than his adjusted…

Q: Write TRUE is the statement is TRUE and write FALSE if the statement is incorrect.…

A: Below is the response given for true or false:

Q: 6. If the business incurred a loss for the period, and there is only a profit sharing agreement in…

A: The given statement is True.... In the absence of agreement between the partners regarding the…

Q: 3. If the partnership secured a bank loan, upon liquidation of the partnership which would be paid…

A: Partnership means where two or more person comes together to do some common business activity and…

Q: f there is partnership deed, then which one of the following will apply? a. Interest on capital is…

A: Solution: In the absence of partnership deed: 1. Interest on capital is not allowed 2. Partners…

Q: which of the following is false regarding the partnership form of business? The potential…

A: Partnership is the arrangement between two or ore parties to start and manage a business and share…

Q: In a going concern, why is the profit or loss of a partnership is being closed to the partners’…

A: Going concern: It is one of the fundamental accounting concept that states that the business entity…

Q: True or False The salary to partners and/or interest on their capital is still distributed in…

A: Partnership means where two or more person comes together to do some common business activity and…

Q: wo people want to form a partnership and want to transfer business assets into the partnership. They…

A: Partnership:- Partnership is defined as the firm in which more than two persons come together to…

Q: K is a capitalist partner. In the articles of partnership, it was provided that K’s duty was to…

A: He will be entitled to right to compensation

Q: When the investment of a new partner into the partnership exceeds his/her initial capital credit,…

A: When the investment of a new partner into the partnership is less than his/her initial capital…

Q: When a partner withdraws from a partnership, why is the final distribution often based on the…

A: Definition: Partnership: This is the form of business entity that is formed by an agreement,…

Q: When a general partner is unable to pay a capital deficiency: The partner must take out a loan to…

A: The correct answer is:- Both B and D As the deficiency is divided between the remaining partner and…

Q: A, one of the partners in the ABC Partnersh decided to buy the share of B in the partnership. Which…

A: Solution: IF A decided to buy share from B directly, following statements are true" 1. Partner's…

Q: Choose the correct. During a liquidation, if a partner’s capital account balance drops below zero,…

A: Liquidation refers to process of selling the inventory of company for generating cash.

Q: If a new partner acquires partnership interest directly from the partners rather than from the…

A: when a new partner is admitted the existing partners’ capital accounts are reduced and the new…

Q: In the liquidating process, any uncollectible deficiency becomes a loss to the partnership and is…

A: Dissolution of the Partnership Firm :— Whenever Reconstituted takes Place between the partners in…

Q: In the liquidation of a partnership, why might a partner be concerned that a fellow partner has a…

A: Given: The elimination of deficit net capital balance of fellow partners.

Q: 1. If the partnership agreement does not specify how profits or losses are to be distributed, they…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: In the liquidating process, any uncollected cash becomes a loss to the partnership and is divided…

A: In the process of liquidation of partnership any collected cash becomes a loss to the partnership…

Q: Answer if TRUE or FALSE. If the statement is FALSE provide at least a brief explanation why it's…

A: Partnership agreement: It is an agreement where business practices for the partners of a company…

Q: The partnership is being dissolved. Unfortunately, the liquidating partner found out that the assets…

A: Limited Partnership (LP)- Under limited partnership, the kind of partners are general partners and…

Q: Which of the following is a disadvantage of general partnerships? ( a) The partners in a general…

A: Under general partnership partners have unlimited liability. Partners of general partnership will be…

Q: Which of the following is a disadvantage of general partnerships? a) A partner who withdraws from a…

A: Partnership is one of the form of business organisation used. This is adopted by two or more than…

Q: In a partnership, a capital deficiency occurs for a partner when Options: • His share in the…

A: Solution: Capital deficiency means debit balance of one or more partner at the time of final cash…

Q: A, one of the partners in the ABC Partnership, decided to buy the share of B in the partnership.…

A: Buying of share of one partner by other will impact the individual equity of the partners.

Q: Emilio Alvarez and Graciela Zavala joined together to form a partnership. Is it possible for them to…

Q: O one who is limited as to how many partnerships he or she can a partne When a partner chooses to…

A: The partnership is an agreement between partners to achieve objectives and share the profit and loss…

Q: Choose TRUE if the statement is correct, and FALSE if it is wrong. 1. There is no impact on the…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: If a partnership is liquidated, partners ( except for limited partners) are liable to the extent of…

A: Partnership is an agreement by two or more individuals to do a business together and the profit or…

Q: Statement I: When a Partnership's operations resulted to a net loss, a partner who contributed legal…

A: answer)If a partner contributed legal services and incurred a loss he would not be able to share…

Q: If a partner who retired from the partnership receives less than the capital balance before…

A: Revaluation/impairment of asset need to be done ,so fair settlement take place.

Q: Assess the truth of this statement: One of the rules of debits and credits and account balances for…

A: Assets and liabilities are measured as per real account concept.

Q: Emilio Alvarez and Graciela Zavala joined together to form a partnership. Is it posible for them to…

A: Partnership firm is formed by the two or more members. These members are called partners and their…

Question

A capital deficiency means that:
) The partnership has a loss.
The partnership has more liabilities than assets.
At least one partner has a debit balance in his/her capital account.
OAt least one partner has a credit balance in his/her capital account.
O The partnership has been sold at a loss.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resources
Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharing
When a partnership dissolves, the first step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partners
When a partnership liquidates, do partners get paid first or do creditors get paid first?
In a partnership, a capital deficiency occurs for a partner when Options: • His share in the losses of the partnership is more than his capital balance • Loan payable by the partnership to him greater than his capital balance • His solvency is lesser than his capital balance • His personal assets are less than his personal liabilities
1. In a partnership liquidation the realization losses result in a debit balance in one partners’ capital account. If this partner fails to contribute personal assets to make up this deficit, how should the debit balance be handled by the partners? a. It should be written off against partnership profits like any other bad debt. b. It should be allocated to all the partners in their profit and loss ratio. c. It should be allocated to the remaining partners in their remaining P and L ratio. d. It should be set up as a receivable and turned over to a collection agency. 2. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance…
In the liquidating process, any uncollectible deficiency becomes a loss to the partnership and is divided among the remaining partners' capital balances based on their income-sharing ratio. True /false
Which of the following is a disadvantage of general partnerships? ( a) The partners in a general partnership are exposed to double taxation. ( b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. ( c) A partner who withdraws from a partnership cannot be held liable for any debts the furm had at the time of withdrawal. ( d) All general partners have unlimited liability for the debts and obligations of their business.
Which of the following is a disadvantage of general partnerships? a) A partner who withdraws from a partnership cannot be held liable for any debts the firm had at the time of withdrawal. b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. c) All general partners have unlimited liability for the debts and obligations of their business. d) The partners in a general partnership are exposed to double taxation.
When a partner withdraws from a partnership and the value of the assets paid tothe partner by the partnership is greater than the balance in his capital account, thepartnership is, in effect, paying the withdrawing partner a bonus. TRUE OR FALSE?
Choose TRUE if the statement is correct, and FALSE if it is wrong. 1. There is no impact on the statement of comprehensive income of a partnership when a partner withdraws from the business. 2. The admission of a partner does not change the composition of the partners’ equity if the new partner purchases the old partner’s interest by paying the old partner directly. 3. A new partner cannot be admitted into a partnership without the consent of all the partners. 4. The dissolution of the partnership discharges the existing liability of any partner. 5. When a newly admitted partner pays a bonus to the existing partners, the new partner’s capital account is debited to record bonus to old partners. 6. Partnership dissolution is synonymous with partnership liqidation. 7. The assets invested into the partnership and not given to the individual partner increase the total assets of the partnership. 8. When a new partner invests more than the proportionate share he receives in the partnership,…
A disadvantage that is NOT peculiar to the partnership form of organization includes a.the interest of a partner in the partnership cannot be transferred without the consent of the other partners. b.termination of the partnership agreement, bankruptcy of the firm, or death of one of the partners dissolves the partnership. c.each partner is individually liable for all of the debts of the partnership. d.the partners do not make the decisions that run the business.