Liquidation of
the implications on other partners when one partner is personally insolvent in the situation of liquidation.
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Chapter 16 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- 2. One characteristic of partnership is a mutual agency, wherein the act of one is the act of the rest of the partnership. With that, are you willing to take blame or responsibility for the wrongful doing of a partner even though he has willingly concealed the circumstances?arrow_forwardTrue or False. 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. Please explain why thanksarrow_forwardIn the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?arrow_forward
- Being in a business of partnership: O a. Increases Individual risk O b. None of these O c. Does not involves any individual risk d. Decreases Individual riskarrow_forwardHow does the risk associated with investment in a partnership differ for the general partner versus a limited partner?arrow_forwardWhich of the following is not a characteristic of a partnership? O It has unlimited liability. O There is ease of transferring ownership. O There is co-ownership of property. O It can be easily dissolved.arrow_forward
- This characteristic explains why partners have a right to choose or refuse who they want to be associated with in the partnership. O Contractual relationship Based on contract O Mutual agency O Voluntary associationarrow_forwardQ1.)Why do you think an industrial partner does not share in the losses of partnership?Q2.)If you decide to join a partnership, which type of admission would you choose and why?Q3.)How may the capital deficiency of an insolvent partner can be eliminated?arrow_forwardI. TRUE OR FALSE. Write TRUE if the statement is correct and FALSE if the statement is wrong. 1. The consent of the other partners is not necessary when admitting a new partner. 2. If a partner dies, the partnership is dissolved. 3. Admission of new partner by purchase of interest is recorded by a debit to the capital account of the buying partner. 4. The admission of a new partner by purchase of interest does not affect the total partner's equity. 5. The admission of a new partner by investment is a transaction between the buying and selling partner. 6. There is increase in assets with corresponding increase in capital under admission of a new partner by investment. 7. There is bonus if the total contributed capital is equal to the total agreed capital. 8. Goodwill refers to the ability of the firm to earn more than what is normal. 9. In liquidation, the partnership continues to operate. 10. In the exercise of the right of offset, the amount offset is the balance of the loan balance…arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
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