Due to which circumstances the existing partner may decide to retire from the firm? O a. Old age O b. Strained or bad relations O c. Poor health O d. All of the options are correct
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- If a partner who retired from the partnership receives less than the capital balance before retirement which also resulted to decrease in the capital balance of remaining partners, which is correct? a. The retiring partner receives bonus from remaining partners b. An impairment loss is recognized before the retirement c. Revaluation surplus is recognized before the retirement d. The retiring partner gives bonus to the remaining partnerChoose 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,…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
- choose the response that correctly the following sentence about an individual partner's outside basis in a partnership. a partner's outside basis? (a) can be less than zero, (b) does not change as long as the partner maintains their partnership interest, (c) is used to apply the basis limitation to losses from a partnership, (d) must be tracked by the partnership.If a partner who retired from the partnership receives less than the capital balance before retirement which also resulted to decrease in the capital balance of remaining partners, which is correct? Revaluation surplus is recognized before the retirement. The retiring partner gives bonus to the remaining partner. An impairment loss is recognized before retirement. The retiring partner receives bonus form remaining partner. Clear selectionThe withdrawal of a partner who receives assets with a value exceeding his capital balance results in A. a decrease in purchase liabilities B. an increase in the capital balances of the remaining partners C. an increase in partnership assets D. a decrease in the capital balances of the remaining partners
- When a partner withdraws from the firm, which accounts are affected?Choose the correct. During a liquidation, if a partner’s capital account balance drops below zero, what should happen?a. The other partners file a legal suit against the partner with the deficit balance.b. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit.c. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses.d. The partner with a deficit contributes enough assets to offset the deficit balance.What accounting steps are taken by a partnership firm when a new partner is unable to bring the business guaranteed by him?
- 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.2. Which of the following is incorrect on why a particular partner may have a deficit balance during a partnership liquidation? I. The partner with the deficit may have the greatest profit and loss residual ratio II. The partner with the deficit may have made the greatest withdrawals from the partnership III. The partner with the deficit may have the smallest profit and loss residual ratio {A}. I only {B}. II only {C}. III only {D}. I and II only 3. When making a distribution to partners during a partnership liquidation, the partner who should receive the last allocation of the distribution is the one who has which of the following? [A] The largest capital account balance [B] The largest loss absorption power [C] The smallest capital account balance [D] The smallest loss absorption powerWrite TRUE if the statement is correct and FALSE if the statement is wrong. Write your answers on the space provided before the number. Erasures are strictly NOT allowed. 1. The loss absorption balances represent the maximum loss that the partners could absorb without reducing their equity below zero. 2. Gains and losses on the sale of assets in liquidation are divided equally among partners. 3. A partnership maybe dissolved without being liquidated but liquidation is always preceded by dissolution. 4. Under the installment method of partnership liquidation, realization of non-cash assets is accomplished over an extended period of time. When cash is available, creditors may be partially or fully paid. Any excess maybe distributed to the partners in accordance with a program of safe payments or a cash priority program. This process persists until all the non-cash assets are sold. 5. Restricted interest are provided for assumed non-sale of remaining non-cash assets and…