In a partnership liquidation,*

1 point

a. partners' loans are paid first before creditors.

b. creditors are paid first before partners' loans

c. partners' capital balances are paid first before partners' loans.

d. partners' capital balances are paid first before creditors

During partnership liquidation, the final allocation of the assets to partners should be?*

1 point

a. Made equally

b. According to the profit or loss ratio

c. According to the final capital account balances

d. According to the initial investment made by each of the partners

Which of the following instances would not dissolve a partnership?*

1 point

a. Death of a partner

b. Bankruptcy of a partner

c. Retirement of a partner

d. Approved annulment proceedings of a partner

The following events dissolve a partnership except*

1 point

a. admission of a partner

b. change of the partnership name

c. conversion of a partnership to a corporation

d. impairment of partnership assets

In an installment liquidation plan, how is the amount of a cash distribution determined?*

1 point

a. By multiplying a partner's P & L ratio by his capital before the liquidation

b. By subtracting a partner's loss absorption potential from the loss absorption potential of the next strongest partner

c. By subtracting a partner's loss absorption potential from the loss absorption potential of the next strongest partner and dividing this difference by his profit and loss ratio

d. By multiplying a partner's profit and loss ratio by the difference between his loss absorption potential and the loss absorption potential of the next strongest partners.

Which of the following will not lead to a dissolution of a partnership?*

1 point

a. Death of a partner

b. Withdrawal of a partner

c. Admission of a new partner

d. Auction sale of some of its assets

Total partners' equity will not be affected when a retiring partner*

1 point

a. withdraws assets equal to his capital balance

b. withdraws assets less than his capital balance

c. sells his interest to a new or remaining partner

d. withdraws assets greater than his or her capital balance

When A retired from the partnership, the final payment to A exceeded his capital balance, under the bonus method, the excess*

1 point

a. Will reduce the capital balance of B and C

b. Will not have an effect to the capital balance of B and C

c. Will be recorded as a loss

d. Will be recorded as a shortage

The following transactions will affect the balance of the total partnership capital except*

1 point

a. retirement of a partner by paying an amount equal to his interest

b. the partnership incurred net loss for the year

c. admission by purchase with bonus

d. permanent retirement by partners

Which of the following is incorrect with regards to the admission of a new partner?*

1 point

a. Admission of a new partner needs the consent of each of the old partners

b. Admission by purchase of interest of one of existing partners need not have the consent of remaining partners

c. Admission of new partner by direct investment in the partnership must have the consent of all the existing partners

d. Admission of new partner either by purchase or by direct investment in the partnership will lead to the dissolution of the partnership