Multiple ChoiceInstruction: Encircle the letter of the corresponding correct answer.1. The process of winding-up the business activity is converting non-cash assets intocash, paying its liabilities and distribution of cash and the remaining assets toindividual partners-a) realizationb) dissolutionc) liquidationd) none of these2. When the partnership's non-cash assets are realized at less than its book valueduring the liquidation process, it results to a -a) gain on realizationb) loss on realizationc)odeficiency transactionsd) none of these3. When a partner develops a debit balance in his capital, but such partner has a loanto the partnership, he may exercise the doctrine of- Partnership: Dissolution with Liquidationa) right of offsetb) right to seizurec) partner's rightd) none of these4. The first priority to be paid when there is cash available in the liquidation process, beit in lump sum or installment type-a) outside creditorsb) partner's loanc) partner's capitald) none of these5. In liquidation by installment, the partner who receives cash when there is cashavailable is the one -a) who can sell the biggest portion of non-cash assetb) who has a negligible amount of liabilityc) who can absorb the share of theoretical or possible lossd) none of these6. In liquidation by installment, final cash settlement among the partners-a) ratio agreed by the partnersb) partner's profit and loss ratioc) partner's capital balanced) none of these

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nstruction: Encircle the letter of the corresponding correct answer. 1. The process of winding-up the business activity is converting no cash, paying its liabilities and distribution of cash and the remain individual partners- a) realization c) liquidation

nstruction: Encircle the letter of the corresponding correct answer. 1. The process of winding-up the business activity is converting no cash, paying its liabilities and distribution of cash and the remain individual partners- a) realization c) liquidation

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 65P

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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
Statement I: In lumpsum liquidation, the remaining cash available after realization and payment of liquidation expenses, will be equal to the total interest of the partners.Statement II: In installment liquidation, the partner who has the highest absorption capacity shall be prioritized in the payment of interest. Group of answer choices Both statements are false Both statements are true S1 is true; S2 is false S1 is false; S2 is true
1. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The partner with a deficit should contribute enough assets to offset the deficit balance. b. The other partners should file a legal suit against the partner with the deficit balance. c. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. d. The deficit balance should be removed from the accounting records with only the remaining partners sharing in future gains and losses. 2. If the total debits in the statement of realization and liquidation exceeds the total credits, there is a.none of these b. net loss for the period c. either net gain for the period d.net gain for the period 3. In the liquidation of a partnership, a loan payable to a partner: a. Must be closed to that partners’ drawing account. b.Has the same priority as amounts payable to outside creditors of the partnership. c.Will not advance the time of payment to that…
no need to explain. What is a cash priority program? a. A guideline for the cash distributions made to partners during a liquidation b. A list of the rules to be performed during a partnership dissolution c. A list of the transactions that will transpire in the reorganization of a partnership d. None of the above
Which of the following is not correct with respect to an installment liquidation of a partnership? A.) All remaining liquidation expenses are anticipated. B.) All non-cash assets are assumed to be worthless. C.) Distributions to partners are always made according to their profit sharing percentages. D.) Partners with the greatest ability to absorb losses and expenses are the first to receive installment distributions.
IDENTIFICATION. The process of winding up business operations which includes realization and payment of claims against partnership The conversion of noncash assets into cash. The right to apply the partner’s loan balance to the partnership against His capital deficiency. The excess of a partner’s share in partnership losses over the partner’sCapital credit balance. Another term for liquidation by total. A partner whose capital account balance is debit. A financial statement that shows the result of the liquidation process. It is transfer of capital from one partner to another. The person assigned to monitor the liquidation process. It is the termination of the life of the partnership.
The process of winding-up the business activity, converting non-cash assets into cash, paying its liabilities and distribution of cash and the remaining assets to individual partners a. Realization c. Dissolution b. Liquidation d. None of these 2. The following are the causes of partnership’s dissolution with liquidation, except – a. Bankruptcy of the firm b. When a partner die c. Mutual agreement among partners to close the business d. The purpose of which it is organized is accomplished already 3. When a partner develops a debit balance in his capital, but such partner has a loan to the partnership, he may exercise the doctrine of – a. Right of offset c. Partner’s right b. Right to seizure d. None of these 4. The first priority to be paid when there is cash available in the liquidation process, be it in lump-sum or installment type – a. Outside creditors c. Partner’s capital b. Partner’s loan d. None of these 5. If a partner is insolvent, his personal properties shall first be…
The following balance sheet is for a local partnership in which the partners have become very unhappy with each other. To avoid more conflict, the partners have decided to cease operations and sell all assets. Using this information, answer the following questions. Each question should be viewed as an situation related to the partnership’s liquidation. The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to Adams, Baker, Carvil, and Dobbs on a 2:3:3:2 basis, respectively, how will the $10,000 be divided? The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated on a 2:2:3:3 basis, respectively, how will the $10,000 be divided? The building is immediately sold for $70,000 to give total cash of $110,000. The liabilities are then paid, leaving a cash balance of $80,000. This cash is to be distributed to the partners. How much of this money will each…
1. Which of the following statement is correct concerning liquidation of a partnership? I. Assets must be liquidated solely through sale transaction II. Assets can be sold at distress prices in a single transaction to an interested party III. All assets can be sold at fair value in a single transaction to a competitor or to others who wish to continue the business. [A] I only [B] I and II only [C] II and III only [D] I, II and III 2. S1: Lump-sum liquidation refers to a series of interim distributions to partners while the sale of noncash assets and the payment of liabilities is occurring. S2: Installment liquidation refers to the sale of noncash assets and payment of liabilities before single distribution to partners. [A] Both statements are correct [B] Both statements are incorrect [C] Only S1 is correct [D] Only S1 is incorrect
Write 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…
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 should be removed from the accounting records with only the remaining partners sharing in future gains and losses. d. The partner with a deficit should contribute enough assets to offset the deficit balance.
What is a predistribution plan? Choose the correct.a. A list of the procedures to be performed during a liquidation.b. A guide for the cash distributions to partners during a liquidation.c. A determination of the final cash distribution to the partners on the settlement date.d. A detailed list of the transactions that will transpire in the reorganization of a partnership.