balance in his capital account may
Chapter21: Partnerships
Section: Chapter Questions
Problem 6BCRQ
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Transcribed Image Text:TRUE OF FALSE:
1. Any partner who may develop a debit balance in his capital account may
exercise the right of offset.
4.
8. Solvent partner is a deficient partner who is capable of paying his capital
deficiency.
9. A partner who develops a debit balance after distribution of realization loss
may contribute additional cash to the partnership.
5.
10. A partner who is declared insolvent, his capital deficiency will be absorbed
by the remaining partners with credit balances based on profit and loss
sharing ratio.
11. In partnership liquidation, partner's loan account and the obligation of the
partnership to outsiders need to be separated although these are both
liabilities.
12. There can be no liquidation unless the business has to be dissolved.
13. The statement of partnership liquidation is patterned after the fundamental
accounting equation, A = L+ OE.
14. The journal entry needed in the right of offset is to debit the capital account
of the deficient partner and credit to loan account of the said partner.
-
15. In liquidation by installment, the main problem is how to equitably
distribute cash as it becomes available while some of the non-cash assets
are waiting to be sold.
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