The admission of a new partner*

1 point

a. does not have an effect on the capital balances of the original partners

b. will decrease the capital balances of the original partners.

c. will increase the capital balances of the original partners,

d. Any of the above

Liquidation differs from dissolution in that in liquidation*

1 point

a. the business will no longer continues

b. assets will be revalued.

c. gains and losses are distributed according to the partnership agreements

d. There are no differences between the two.

Under the Partnership Law, partnership assets are o be distributed to partners in this order:*

1 point

a. Capital balances, loans, profits

b. Loans, profits, capital balances

c. Loans, capital balances, profits

d. Profits, capital balances, loan

In the installment liquidation of a partnership, the P & L ratio can now be used for cash payments to partners:*

1 point

a. Anytime

b. Throughout the liquidation process

c. Once the partners' capital balances are in proportion to the profit and loss ratio

d. None of the above

Which is not a valid reason for partnership dissolution?*

1 point

a. admission of a new partner

b. retirement of a partner

c. declaration of partner's insolvency

d. partnership incurred net loss for the year

When a partner retires from a partnership taking assets greater than his capital balance,*

1 point

a. no bonus will occur

b. the withdrawing partner receives a bonus

c. the remaining partners receive a bonus

d. none of the above

1st: As a rule, the personal assets of the partners shall first be paid first to their respective personal creditors. 2nd: In general, insolvency arises when a business cannot pay obligations as they become due*

1 point

a. Only 1st statement is correct

b. Only 2nd statement is correct

c. Both statements are correct

d. Both statements are wrong

What should happen when a partner's capital account balance drops below zero during partnership liquidation?*

1 point

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.

It is the process of selling the assets, paying the liabilities, and distributing the remaining cash to the partners*

1 point

a. Dissolution

b. Formation

c. incorporation

d. Liquidation

In liquidation, the liabilities of the partnership should be paid*

1 point

a. after revaluation of assets.

b. before any sale of assets.

c. before the distribution of cash to partners.

d. none of the above.