LIQUIDATION

Question 1

The process of winding up a business

Answer 1

LIQUIDATION

Question 2

The liquidation ratios will always be equal to the profit and loss ratio of the partners

Answer 2

FALSE

Question 3

A deficient partner is automatically an insolvent partner

Answer 3

FALSE

Question 4

The account credited for loans made by the partners to the partnership

Answer 4

Loan Payable

Question 5

The excess of a partner’s share on losses over his capital

Answer 5

Addition in Capital

Question 6

Personal creditors of individual partners have priority over partnership creditor in the order of claims against the personal assets of a partner

Answer 6

TRUE

Question 7

A partner whose personal liabilities exceed his personal assets

Answer 7

Insolvent Partner

Question 8

The process of converting non-cash assets into cash

Answer 8

Realization

Question 9

A partner with a loan to the partnership may never become a deficient partner

Answer 9

FALSE

Question 10

Partnership dissolution will always be followed by liquidation

Answer 10

FALSE

Question 11

In a statement of liquidation, the accounting equation is observed throughout te liquidation process

Answer 11

TRUE

Question 12

The excess of the selling price over the cost or book value of the assets disposed or sold through realization

Answer 12

Gain on Realization

Question 13

The manner of dividing gains and losses on the realization of non-cash assets in liquidation

Answer 13

Profit and Loss ratio

Question 14

It includes the capital balance and the partner’s loan to the partnership

Answer 14

Partner’s Interest

Question 15

Expenses incurred in order to facilitate the immediate realization of non-cash assets

Answer 15

Liquidation Expenses

Question 16

They have priority over the personal assets of a partner

Answer 16

Personal Creditor

Question 17

An accounting statement summarizing the winding up of the affairs of the partnership

Answer 17

Statement of Liquidation

Question 18

The order of partnership liquidation process is

Answer 18

Sell Assets, Pay Liabilities, Disburse Cash to partners

Question 19

The manner of eliminating the capital deficiency of an insolvent partner; after exercising the right of offset when applicable

Answer 19

Loss to the other partner

Question 20

The principle that allows a partner to apply his receivable from the partnership against a debit balance in his account

Answer 20

Right of Offset

Question 21

The manner of eliminating the capital deficiency of a solvent partner who does not have loans to the partnership

Answer 21

Additional Investment

Question 22

A capital deficiency in a partner’s capital that is uncollectible is

Answer 22

A loss to the other partners

Question 23

The order of creditors’ rights against the partnership’s assets and the personal assets of individual partners

Answer 23

Marshalling of Assets

Question 24

A partner with a debit balance in his capital account after the transfer of the loss on realization

Answer 24

Deficient Partner

Question 25

The proper treatment of a credit balance in a partner’s drawing account in the statement of liquidation

Answer 25

Addition to Capital

Question 26

In a partnership liquidation, a loss from sale of non-cash assets is allocated to the

Answer 26

Partners based on the profit and loss sharing ratio

Question 27

The basis for the final distribution of cash to partners in case of liquidation

Answer 27

Capital Balance

Question 28

A liquidation in which the proceeds from all assets into cash

Answer 28

Lump-sum Liquidation

Question 29

Amount of money advanced by the partner to the partners

Answer 29

Loan Receivable from Partner

Question 30

A liquidation that is spread over a long period and the partners distribute cash as it becomes available without waiting until all assets are realized

Answer 30

Installment Liquidation