Chapter 6 - Partnership Liquidation (LUMP-SUM)

Ace your homework & exams now with Quizwiz!

Insolvent partner

A partner whose personal liabilities exceed his personal assets.

Deficient partner

A partner with a debit balance in his capital account after receiving his share on the loss on realization.

Loan receivable to partners

Amount of money advanced by the partnership to the partners.

Liquidation by installment

Assets are realized on a piece-meal basis and cash is distributed to partners on a periodic basis as it becomes available.

Loan payable

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

Lump-sum liquidation

The distribution of cash to the partners is done only after all the non-cash assets have been realized.

Capital deficiency

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

Loss on realization

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

Gain on realization

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

Capital balances

The final distribution of cash to partners is made based on partners' _____________ and not on any ratio.

Pnl ratio

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

Additional investment

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

Additional loss to the partners

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

Termination

The point in time when all partnership affairs are ended.

Right of offset

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

Realization

The process of converting non-cash assets into cash.

Winding up

The process of settling the business or partnership affairs; it is synonymous to liquidation.

Addition to capital

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

Partner's interest

The sum of a partner's capital, loan balance and advances to the partnership.

Dissolution

The termination of a partnership as a going concern; it is the termination of the life of a partnership.

Personal creditors

They have priority over the personal assets of a partner.

Statement of liquidation

This statement presents in working paper form the effect of the liquidation on the statement of financial position.

Solvent partner

A partner whose personal assets exceed his personal liabilities.

Liquidation expenses

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

Partner's restricted interest

It cannot be paid to the partners due to inadequacy of cash.

Marshaling of assets

It involves the order of creditors' rights against the partnership's assets and the personal assets of the individual partners.

Partner's free interest

It represents partner's interest that can be paid out of the available cash of the partnership.

Liquidation

Partnership dissolution calling for the winding up of business affairs.


Related study sets

Chapter 15 - D'Amico/Barbarito Health & Physical Assessment in Nursing, 2/e

View Set

WGU Humanities - Romantic Period

View Set

Chemistry Study Guide Midterm Exam

View Set