smatbook 7
Preparation of a proposed schedule of liquidation is based on the assumption any partner with a deficit capital balance will
not make any cash contribution to the partnership to cover their deficit.
Liquidation expenses are allocated to individual partners' capital accounts on the basis of
partners' relative profit and loss ratios.
The amount that can be distributed to an individual partner during the liquidation process while ensuring that partner has a safe capital balance can be referred to as a payment.
safe
A partner with a negative capital balance should make a contribution to the partnership in an amount equal to
that partner's negative capital balance.
When making distributions of cash to partners during the liquidation process, the accountant must ensure that each partner has a capital balance, which is the minimum amount that a partner must retain in their capital account to be able to absorb future losses.
Blank 1: safe
At the beginning of a liquidation, a loan made by an individual partner to the partnership would be
added to that partner's capital account.
A partnership has four partners, two of whom have negative capital balances and one of these is personally insolvent. When the personally insolvent partner's deficit capital balance is written off
all of the other partners absorb the loss.
A statement of partnership liquidation reports updated balances in the partnership's assets, liabilities, and capital accounts
at periodic intervals.
The maximum amount of loss that can be absorbed by an individual partner is calculated
by dividing the partner's capital balance by their profit and loss allocation.
The procedures involved in terminating and liquidating a partnership include
distributing partnership cash to individual partners after partnership liabilities and liquidation expenses have been paid.
Partners' relative profit and loss ratios are used as the basis for allocating
gains on sales of assets to partners' capital accounts. liquidation expenses to partners' capital accounts.
During a partnership liquidation, credits are made to individual partners' capital accounts to recognize each partner's share of
gains on sales of partnership assets.
In preparing a proposed schedule of liquidation, the accountant assumes that liquidation expenses will be the
maximum amount in the range of probable future expenses.
At the time of partnership termination, Partner A is personally insolvent and has a negative capital balance. Partners B and C must absorb A's deficit
on the basis of their respective profit and loss ratios.
Gains on sales of partnership assets are allocated to individual partners' capital accounts based on
partners' relative profit and loss ratios.
A statement of partnership liquidation discloses
partnership liabilities remaining to be paid. assets still held by the partnership. current capital balances.
A safe payment is the amount that can be distributed to an individual partner during the liquidation process while ensuring that the partner's capital account maintains a
safe balance.
The procedures involved in terminating and liquidating a partnership include
selling partnership assets to convert them into cash.
At the beginning of a liquidation, a loan made by the partnership to an individual partner would be
subtracted from that partner's capital account.
A partner's safe capital balance is the amount
that must remain in that partner's capital account to absorb any future losses.
When a partner has a negative capital balance, but is personally solvent,
that partner makes a capital contribution to the partnership.
When a partner has a negative capital balance, but is personally solvent, Multiple choice question.
that partner makes a capital contribution to the partnership.
Cash can be safely distributed to an individual partner in a preliminary distribution of partnership assets only if
that partner's capital balance is large enough to absorb all possible future losses.
Some amount of partnership cash can be safely distributed to partners at the date of partnership termination if
the partnership is solvent.
Gains and losses on the sale of assets during a partnership liquidation are recorded directly in partners' capital accounts
to keep track of changes in partners' capital balances.
In preparing a proposed schedule of liquidation, the accountant assumes that all future partnership transactions will result in
total losses.
A proposed schedule of liquidation is based on the assumption that all future partnership transactions will result in losses.
Blank 1: total
At the time of partnership termination, Partner A is personally insolvent and has a negative capital balance. Partners B and C must absorb A's deficit through
a reduction in their capital accounts.
Preparation of a proposed schedule of liquidation is based on the assumption that the partnership's noncash assets
cannot be sold for cash.
The earliest date at which some partnership cash can be distributed to partners is
the date of termination.
When partnership assets are sold on a piecemeal basis over time and cash is distributed to partners after each sale of assets,
a new proposed schedule of liquidation should be prepared before each distribution of cash to partners.
In preparing a proposed schedule of liquidation, the deficit in a partner's capital account resulting from simulated losses should be allocated to the other partners' capital accounts
based on their relative profit and loss ratios.
At the time of the termination of the ABCD partnership, Partner A and Partner B have negative capital balances, and Partner A is personally insolvent. After Partner A's deficit capital balance is written-off, the balance in Partner B's capital account
is a larger negative amount.
A statement of partnership liquidation discloses
liquidation transactions already carried out.
During a partnership liquidation, debits are made to individual partners' capital accounts to recognize each partner's share of
losses on sales of partnership assets.
A statement of partnership liquidation reports updated balances in the partnership's assets, liabilities, and
partners capital accounts
A statement of partnership liquidation should include several columns of information that show changes in
partnership liabilities. individual partners' capital accounts. partnership cash.
In addition to accounting for the transactions that transpire during a partnership liquidation, the partnership's accountant
should work to make sure that all parties involved in the liquidation are treated equitably. might be asked to make recommendations regarding the distribution of partnership funds.
The procedures involved in terminating and liquidating a partnership include
using cash from the sale of partnership assets to pay any expenses incurred in the liquidation process. using cash from the sale of partnership assets to pay off partnership liabilities.
Two partners (X and Y) have equal balances in their capital accounts and have agreed to share profits and losses on a 55:45 basis, respectively. When partnership assets are liquidated, partner Y's capital account will be increased for
45% of gains on sales of partnership assets.
Two partners (A and B) have equal balances in their capital accounts and have agreed to share profits and losses on a 60:40 basis, respectively. When partnership assets are liquidated, partner A's capital account will be reduced for
60% of losses on sales of partnership assets.
Two partners (L and M) have equal balances in their capital accounts and have agreed to share profits and losses on a 70:30 basis, respectively. When the partnership is liquidated, partner L's capital account will be reduced for
70% of liquidation expenses.
Partners A, B,and C share profits and losses in a ratio of 50%, 40%, 10%, respectively. Simulated losses result in A having a deficit capital balance. The amount of A's deficit that should be allocated to B's capital account in a proposed statement of liquidation is
80
A single plan drawn up at the beginning of a liquidation that serves as a guide to all future distributions of cash to partners is known as a plan.
Blank 1: predistribution
In addition to accounting for the transactions that occur during a partnership liquidation, the partnership's accountant should work to ensure the treatment of all parties involved in the liquidation.
Blank 1: equitable
Only those partners with a capital balance that is large enough to absorb all possible future will receive cash in a preliminary distribution of partnership assets.
Blank 1: losses or deficits
