Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

COBLAW1 > ACCCOB1 (QUIZ 3) > Flashcards

ACCCOB1 (QUIZ 3) Flashcards

1
Q

The definition of partnership is found in Article 1767 of the Civil Code of the Philippines

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

A change in the business relationship of the partners causes dissolution which will lead to the shutting down of the business.

A

FALSE
Business may still continue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Withdrawal of a partner causes dissolution but the admission of a new partner does not

A

FALSE
Admission of a new partner causes dissolution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The causes of dissolution are enumerated in Article 1830 of the Civil Code of the Philippines.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

The insolvency of a partner may cause dissolution.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Dissolution is the termination of the firm as a legal entity which means that dissolution and liquidation are
the same.

A

FALSE
They are not the same

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A dissolved partnership may continue to conduct business under a new agreement.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When the managing partner of a partnership withdraws, dissolution occurs and the dissolution of the
partnership discharges the existing liability of any partner.

A

FALSE
All liabilities must be paid by the partners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A new partner cannot be admitted into the partnership without the consent of all the partners

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

. A purchased B’s P200,000 capital interest for P200,000, the ensuing entry on the books of the
partnership would contain a debit to cash for P200,000.

A

FALSE
Cash was not received by the partnership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

In admission by purchase, payment is personally made to the partner from whom the interest is obtained
resulting to mere transfers among capital accounts.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

. Dissolution results when a partner dies and the remaining partners decide to discontinue the business

A

FALSE
Liquidation happens when the business is discontinued

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

If a partner withdraws by selling his equity interest to the partnership in exchange for an amount greater
than the balance in his capital account, the excess payment will be treated as a bonus to the continuing
partners.

A

FALSE
Bonus to the retiring partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The retirement of a partner by payment from partnership assets may cause the other partners’ capital
accounts to decrease

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Total contributed capital is the sum of the capital balances of the old partners and the actual investment of
the new partner.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Which is not a cause of distribution?
A. Admission of a new partner
B. Retirement of a new partner
C. Annulment of a partner’s marriage
D. Death of a partner

A

C. Annulment of a partner’s marriage

16
Q

When admitting a new partner by investment, a bonus to old partners
A. is usually unjustified because carrying values clearly reflect partnership net worth.
B. is sometimes justified because the old partners requested the new partner to join them.
C. results if the debit to cash is less than the new partner’s capital credit.
D. results if the debit to cash is higher than the new partner’s capital credit.

A

D. results if the debit to cash is higher than the new partner’s capital credit.

17
Q

. A bonus to a new partner will
A. increase the capital balances of existing partners based on their profit ratios before the
admission of the new partner.
B. increase the capital balances of existing partners based on their profit ratios after the
admission of the new partner.
C. decrease the capital balances of existing partners based on their profit ratios before the
admission of the new partner.
D. decrease the capital balances of existing partners based on their profit ratios after the
admission of the new partner.

A

D. decrease the capital balances of existing partners based on their profit ratios after the
admission of the new partner

18
Q

A joins the partnership of B and C by paying P30,000 in cash. If the net assets of the
partnership are still the same amount after A has been admitted as a partner, then A
A. must have been admitted by investment of assets.
B. must have been admitted by purchase of a partner’s interest.
C. must have received a bonus upon being admitted.
D. could have been admitted by an investment of assets or by a purchase of a partner’s interest.

A

B. must have been admitted by purchase of a partner’s interest.

19
Q

When a partner withdraws from the firm and is paid from the remaining partners’ personal assets.
Which of the following reflects the correct partnership effects?
A. Total assets decrease
B. Total capital increase
C. Total liabilities increase
D. Total net assets are unchanged

A

D. Total net assets are unchanged

20
Q

If a bonus is traceable to the old partners rather than to a new partner, it is allocated among the
partners according to the
A. capital ratio of the old partners.
B. capital ratio of the new partnership.
C. profit and loss ratio of the old partnership.
D. profit and loss ratio of the new partnership.

A

C. profit and loss ratio of the old partnership.

21
Q

Which of the following results in the dissolution of a partnership?
A. The winding up of the partnership and the distribution of remaining assets to the partners.
B. The contribution of additional assets to the partnership by an existing partner.
C. The receipt of share in profit by an existing partner.
D. The withdrawal of a partner from a partnership

A

D. The withdrawal of a partner from a partnership.

21
Q

Total partners’ equity will not change when a withdrawing partner
A. sells his interest to a new or remaining partner.
B. withdraws assets equal to his capital balance.
C. withdraws assets amounting to less than his capital balance.
D. withdraws assets amounting to greater than his capital balance.

A

A. sells his interest to a new or remaining partner.

22
Q

When A retired from A, B and C, he received cash in excess of his capital account balance. Under
the bonus method, the excess received by A
A. had no effect on the capital account balances of B and C
B. reduced the capital account balances of B and C
C. increased the capital balances of B and C
D. was recognized as an operating expense of the partnership

A

B. reduced the capital account balances of B and C

23
Q

The ABC Partnership decided to revalue the firms’ properties from P100,000 to P500,000. This
will
A. increase partnership assets only.
B. increase partners’ equity only.
C. increase partnership assets and partners’ equity.
D. decrease partnership assets and partners’ equity.

A

C. increase partnership assets and partners’ equity

24
Q

When B retired from the partnership of A, B and C, the final settlement of B’s interest exceeded
B’s capital balance. They share profits and losses equally. Under the bonus method, the excess
A. was recorded as goodwill.
B. was recorded as expense.
C. had no effect on the capital balances of A and C.
D. reduced the capital balances of A and C.

A

D. reduced the capital balances of A and C

25
Q

ABC Partnership decided to admit D who purchased A’s share. The effect of this transaction is
A. an increase in partnership assets and partners’ equity.
B. an increase in A’s assets, increase in D, Capital and decrease in A, Capital.
C. a decrease in A, Capital and increase in D, Capital.
D. a decrease in D, Capital and increase in A, Capital.

A

C. a decrease in A, Capital and increase in D, Capital.

26
Q

C decided to withdraw from the ABC Partnership. A cash settlement was made by A to C. This will
A. not change total partners’ equity.
B. increase partners’ equity.
C. decrease partner A’S assets and partners’ equity
D. decrease partnership assets and partners’ equity.

A

A. not change total partners’ equity.

27
Q

How does a solvent partner’s capital balance affect the need for additional contributions during
liquidation?
A. Solvent partners are always required to make additional contributions.
B. Solvent partners are never required to make additional contributions.
C. Solvent partners can be required to make additional contributions to settle deficiencies.
D. Solvent partners only make contributions to increase their profit share.

A

C. Solvent partners can be required to make additional contributions to settle deficiencies.

28
Q

What are the right actions to take when documenting the partnership’s liquidation process? Consider
these steps:
I - Share any remaining cash among the partners.
II - Convert non-cash assets into cash.
III - Settle debts with external creditors.
IV - Settle debts with internal creditors.
A. II, I, III, IV
B. II, III, IV, I
C. II, IV, III, I
D. III, IV, II, I

A

B. II, III, IV, I

COBLAW1 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions