FUNDAMENTALS OF ADVANCED ACCOUNTING >I
6th Edition
ISBN: 9781307007350
Author: Hoyle
Publisher: MCG/CREATE
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Chapter 10, Problem 2P
To determine
Identify the statement which is true concerning the accounting for a partnership going through liquidation.
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Choose the correct.Which of the following statements is true concerning the accounting for a partnership going through liquidation?a. Gains and losses are reported directly as increases and decreases in the appropriate capital account.b. A separate income statement is created to measure only the profit or loss generated during liquidation.c. Because gains and losses rarely occur during liquidation, no special accounting treatment is warranted.d. Within a liquidation, all gains and losses are divided equally among the partners.
In a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit.
Group of answer choices
True
False
In the liquidation of a limited liability partnership, a loan payable to a partner by the partnership is:
a.
Considered to be the same as the partner's capital account
b.
Paid before all outside creditors have been paid in full
c.
Considered to be zero.
d.
Used to absorb the partner's share of losses on realization of assets
Chapter 10 Solutions
FUNDAMENTALS OF ADVANCED ACCOUNTING >I
Ch. 10 - Prob. 1QCh. 10 - Prob. 2QCh. 10 - Prob. 3QCh. 10 - Prob. 4QCh. 10 - What is the purpose of a statement of liquidation?...Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - What is the purpose of a proposed schedule of...Ch. 10 - Prob. 10Q
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - A partnership is considering possible liquidation...Ch. 10 - What is a predistribution plan? a. A list of the...Ch. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - The following balance sheet is for a local...Ch. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - March, April, and May have been in partnership for...Ch. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31P
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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
- What is the first step in a partnership liquidation (termination and sale of assets)?arrow_forwardWhen a partnership dissolves, the last 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 partnersarrow_forwardWhen 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 partnersarrow_forward
- IDENTIFICATION: 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.arrow_forwardWhich 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.arrow_forwardChoose 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.arrow_forward
- Which one of the following statement is not correct on preparation of partnership final accounts? a. Adjustments will be recorded have dual effects in the income statement and statement of financial position b. Preparation of income statement is same as sole proprietorship business c. Net profit from income statement will be transferred to partners' capital account d. Accounting principles are same as sole proprietorship businessarrow_forward1. 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…arrow_forwardSHOW YOUR SOLUTION IN GOOD ACCOUNTING FORM: The ETO Partnership is in the process of liquidation. The account balances prior to liquidation are given below: The partners share profits in the following ratio: Aurora, 1/6; Esteban, 2/6; and Tyro, 3/6. Upon liquidation of the partnership, Aurora should have received:arrow_forward
- 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…arrow_forwardIn 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 /falsearrow_forwardDuring a liquidation, if a partner’s capital account balance drops below zero, what Should Happen? The other partners file a legal suit against the partner with the deficit balance. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses. The partner with a deficit contributes enough assets to offset the deficit balance.arrow_forward
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