Partnership Liquidation (Concepts - Quizizz)

Question 1

A deficiency occurs for a partner when:

A. his personal assets are less than his personal liabilities
B. his share in the losses of the partnership is more than the capital balance
C. his personal assets are lesser than his capital balance
D. loan payable by the partnership to him is greater than his capital balance

Answer 1

B. his share in the losses of the partnership is more than the capital balance

Question 2

If A’s capital is deficient, but there is a loan payable to B, the right of offset can be applied. True or False?

Answer 2

False. It cannot, A must have a loan payable from the partnership.

Question 3

Partner A has a capital deficiency of P25,000, and the partnership has an existing loan payable to A amounting to P30,000. Partner A can opt to collect just the balance of P5,000 from the partnership. This option is called the:

A. capital deficiency
B. right of offset
C. loss on realization
D. balance payment

Answer 3

B. right of offset

Question 4

In liquidation, the sale of non-cash assets is called:

A. realization
B. net proceeds
C. gain from sale
D. loss from sale

Answer 4

A. realization

Question 5

This results when a partner dies and the remaining partners decide to terminate the business:

A. dissolution
B. liquidation
C. incorporation
D. recognition

Answer 5

B. liquidation

Question 6

Lump sum liquidation is the process where partners receive cash as it becomes available. True or False?

Answer 6

False

Question 7

The feature of unlimited liability covers all partners. True or False?

Answer 7

False. It does not cover limited partners and industrial partners.

Question 8

When a partner is insolvent, he will no longer have any share in the losses or liquidation expenses. True or False?

Answer 8

False. They still have a share in loss/liquidation expenses.

Question 9

If the proceeds from the sale is less than the book value of the non-cash assets sold, this will decrease partnership assets but increase the partners’ equity. True or False?

Answer 9

False. This will not affect partners’ equity

Question 10

If there are at least two solvent partners who will absorb the capital deficiency of one insolvent general partner, the deficient amount is absorbed based on the residual capital balances. True or False?

Answer 10

False. It is absorbed by the partners