Acctg 102 - True or False (Liquidation)
True
A partner's inability to meet his obligations at the time of liquidation relieves that individual of his liabilities to the other partners
False
A partner's interest can be obtained by simply adding the partner's capital account, loans to and from the partnership
True
A partnership is said to be dissolved when the business is terminated
False
Gains and losses on the sale of assets in liquidation are divided equally among partners
False
If liquidation of a partnership results in a negative balance in a partner's account, the partner must pay into the partnership the amount of the negative balance
False
In liquidation, partners are given back the assets that they originally invested
True
In partnership liquidation one partner may have to make up for the deficit in another partner's account
True
Liquidation of a partnership is the process of ending business
True
Liquidation of a partnership is the winding up of its business activities characterized by sale of all non-cash assets, settlement of all liabilities and distribution of the remaining cash to the partners
True
Partnership creditors shall have priority in payments than those of the partners separate creditors as regards the separate properties of the partners
True
Partnership creditors will be prioritized next to the inside creditors as to partnership assets in case of liquidation
False
Partnership liquidation is the same as partnership dissolution
True
Restricted interest are provided for assumed non-sale of remaining non-cash assets and for assumed insolvency of deficient partners
False
The cash settlement of all liabilities is referred to as realization
False
The creditors of each partner shall be preferred to those of the partnership as regards the partnership property
True
The creditors of the partnership are preferred with respect to the separate or personal properties of the partners
True
The creditors of the partnership shall have priority over those of the partners separate creditors as regards the partnership properties
False
The entry to record the exercise of offset will debit the partner's loan account and credit cash
True
The loss absorption balances represent the maximum loss that partners could absorb without reducing their equity below zero
True
The right of offset is the legal right of a partner to apply part or all of his loan account balance against a capital deficiency resulting from losses in the realization of the partnership assets
False
The use of safe payments schedule and cash priority program are alternatives which will be yield the same ultimate cash distributions to the partners
True
Under the installment method of partnership liquidation, realization of non-cash assets is accomplished over an extended period of time. When cash is available, creditors may be partially or fully paid.
False
When a partnership goes out of business, all the remaining non-cash assets will be declared as a total loss. This loss on liquidation shall be divided among the partners in their profit and loss ratio
True
When cash is insufficient to fully satisfy the cash requirements in a particular priority, then the available cash will be distributed using the profit and loss ratio
False
A partner's unrestricted interest represents the portion of a partner's interest which should remain available to absorb possible future losses
True
A partnership may be dissolved without being liquidated but liquidation is always preceded by dissolution
False
Cash payments may be made in the profit and loss ratio only when installment payments have caused the ratio of the partners' capital account balances to be the same as the profit loss ratio