1. White, Sands and Luke has the following capital balances and profit and loss ratios: P50,000 (30%), P100,000 (20%), and P200,000 (50%). If the partnership is to be liquidated and P150,000 becomes available for the partners immediately, who gets the money?

A. P0 White; P47,143 Sands; P102,857 Luke

B. P20,000 White; P57,143 Sands; P82,857 Luke

C. P10,000 White; P47,143 Sands; P92,857 Luke

D. P0 White; P57,143 Sands; P92,857 Luke

2. During the liquidation of Gym, Hob and Ing Partnership, Partner Hob withdrew equipment with a cost to the partnership of P18,000, accumulated depreciation of P8,000, and a current fair value of P13,000. The partners shared net income and losses equally. The net debit of Hob's capital account (including any gain or loss on disposal of the equipment), assuming the noncash asset may be distributed safely to Hob, is:

A. P10,000

B. P12,000

C. P13,000

D. P18,000

3. During the liquidation of the partnership of Karr, Rice and Long, Karr accepts, in partial settlement of his interest,machine with a cost to the partnership of P150,000, accumulated depreciation of P70,000, and a current fair market value of P110,000. The partners share net income and loss equally. The net debit to Karr's account (including any gain or loss on disposal of the machine) is

A. P100,000

B. P110,000

C. P90,000

D. P15,000

4. X, Y and Z have capital balances of P90,000, P60,000 and P30,000, respectively. Profits are allocated 35% to X, 35% to Y, and 30% to Z. The partners have decided to dissolve and liquidate the partnership. After paying all creditors, the amount available for distribution is P60,000. X, Y and Z are all personally solvent. Under the circumstances, Z will

A. Personally have to contribute an additional P36,000.

B. Personally have to contribute an additional P6,000.

C. Receive P18,000

D. Receive P30,000

5. In a simple partnership liquidation, the last remaining cash distribution should be made according to the ratio of

A. The individual partner's capital accounts, increased by partner loans to the partnership.

B. The individual partner's capital accounts, increased by partnership loans to the partners and decreased by partner loans to the partnership.

C. The individual partner's capital accounts, decreased by partnership loans to the partners and increased by partner loans to the partnership.

D. The individual partner's profit and loss agreement.

6. Which of the following statements is correct regarding a partners' debit capital balances?

A. Partners who absorb another's debit capital balance have a legal claim against the deficient partner.

B. The partner should make contributions to reduce the debit balance to whatever extent possible.

C. All of these statements are correct.

D. If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance based on their proportionate profit-and-loss-sharing percentages.

7. If a partnership has only non-cash assets, all liabilities have been properly disbursed, and no additional liquidation expenses are expected, the maximum potential loss to the partnership in the liquidation process is:

A. None of the above

B. The fair market value of the non-cash assets

C. The estimated proceeds from the sale of the assets less the book value of the non-cash assets

D. The book value of the non-cash assets

8. Which of the following procedures is acceptable when accounting for a deficit balance in a partner's capital account during partnership liquidation?

A. A partner with a negative capital balance must contribute personal assets to the partnership that are sufficient to bring the capital account to zero.

B. If a partner with a negative capital balance is personally insolvent, the negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to those partners having positive balances.

C. If a partner with a negative capital balance is personally insolvent, the negative capital balance may be absorbed by those partners having a positive capital balance according to the residual profit and loss sharing ratios that apply to all the partners.

D. All the above procedures are acceptable.

9. A partnership dissolution differs from liquidation in that

A. Payments are made to creditors before partners receive value.

B. Full payment is made to all outside creditors before remaining cash is distributed partners in a final lump sum payment.

C. A partner withdraws from the business and the enterprise continues to function.

D. Periodic payments to partners are made when cash becomes available.

10. A partnership in liquidation has converted all assets into cash and paid all liabilities, the order of payment

A. Will be according to the partners' residual profit and loss sharing ratios.

B. Will have amounts owed by partners other than for capital and profits take precedence over amounts due to partners with respect to their capital accounts.

C. Will be by any manner that is both reasonable and rational for the partnership.

D. Will have amounts due to partners with respect to their capital accounts take precedence over amounts owed by partners other than for capital and profits