nstruction: Encircle the letter of the corresponding correct answer. 1. The process of winding-up the business activity is converting no cash, paying its liabilities and distribution of cash and the remain individual partners- a) realization c) liquidation
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- Statement I: In lumpsum liquidation, the remaining cash available after realization and payment of liquidation expenses, will be equal to the total interest of the partners.Statement II: In installment liquidation, the partner who has the highest absorption capacity shall be prioritized in the payment of interest. Group of answer choices Both statements are false Both statements are true S1 is true; S2 is false S1 is false; S2 is trueIn the liquidation of a partnership, it is necessary to (1) distribute cash to the partners, (2) sell noncash assets, (3) allocate any gain or loss on realization to the partners and (4) pay liabilities. These steps should be performed in the following order Select one: a. (2), (3), (1), (4). b. (2), (3), (4), (1). c. (3), (2), (1), (4). d. (3), (2), (4), (1).no need to explain. What is a cash priority program? a. A guideline for the cash distributions made to partners during a liquidation b. A list of the rules to be performed during a partnership dissolution c. A list of the transactions that will transpire in the reorganization of a partnership d. None of the above
- After Non-Cash Assets have been sold and liabilities paid, the final step in the liquidation process is to distribute the balance of Cash to the partners. Consider the following: Cash $20 A, Capital Balance $8 B, Capital Balance $12 Gains and losses are shared equally between the partners. Which of the following is correct? Group of answer choice a.B would receive$12 as the final payment of cash. b. B would receive $10 as the final payment of cash. c. B would receive $8 as the final payment of cash. d. B would receive $20 as the final payment of cash.The process of winding-up the business activity, converting non-cash assets into cash, paying its liabilities and distribution of cash and the remaining assets to individual partners a. Realization c. Dissolution b. Liquidation d. None of these 2. The following are the causes of partnership’s dissolution with liquidation, except – a. Bankruptcy of the firm b. When a partner die c. Mutual agreement among partners to close the business d. The purpose of which it is organized is accomplished already 3. When a partner develops a debit balance in his capital, but such partner has a loan to the partnership, he may exercise the doctrine of – a. Right of offset c. Partner’s right b. Right to seizure d. None of these 4. The first priority to be paid when there is cash available in the liquidation process, be it in lump-sum or installment type – a. Outside creditors c. Partner’s capital b. Partner’s loan d. None of these 5. If a partner is insolvent, his personal properties shall first be…Write a Sample Format of Statement of Liquidation (Lump Sump) Other Instruction (Assumptions) 1. Values should be written as XXX if positive and (XXX) if negative 2. 7 Partners [Jk, V, RM, Jimin, Hobi, Jin and Suga] 3. There is a gain in the realization of assets 4. There is liquidation expense. 5. V has receivables from partnership. 6. Jin and Suga have payables to the partnership
- The first step in the liquidation of a partnership is to* allocate a gain or loss on realization to the partners. O distribute remaining cash to the partners. O pay partnership liabilities. sell noncash assets and recognize a gain or loss on realization.IDENTIFICATION: Another term for liquidation by total. A partner whose capital account balance is debit. A financial statement that shows the result of the liquidation process. It is transfer of capital from one partner to another. The person assigned to monitor the liquidation process. It is the termination of the life of the partnership.S1: In liquidation process, the noncash assets are sold only to outside parties but never to any of the partners. S2: An insolvent partners’ capital deficiency can be solved by his additional cash contribution. a. Both statements are correct b. Both statements are incorrect c. Only S1 is correct. d. Only S1 is incorrect.
- 1. Which of the following statement is correct concerning liquidation of a partnership? I. Assets must be liquidated solely through sale transaction II. Assets can be sold at distress prices in a single transaction to an interested party III. All assets can be sold at fair value in a single transaction to a competitor or to others who wish to continue the business. [A] I only [B] I and II only [C] II and III only [D] I, II and III 2. S1: Lump-sum liquidation refers to a series of interim distributions to partners while the sale of noncash assets and the payment of liabilities is occurring. S2: Installment liquidation refers to the sale of noncash assets and payment of liabilities before single distribution to partners. [A] Both statements are correct [B] Both statements are incorrect [C] Only S1 is correct [D] Only S1 is incorrect1. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The partner with a deficit should contribute enough assets to offset the deficit balance. b. The other partners should file a legal suit against the partner with the deficit balance. c. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. d. The deficit balance should be removed from the accounting records with only the remaining partners sharing in future gains and losses. 2. If the total debits in the statement of realization and liquidation exceeds the total credits, there is a.none of these b. net loss for the period c. either net gain for the period d.net gain for the period 3. In the liquidation of a partnership, a loan payable to a partner: a. Must be closed to that partners’ drawing account. b.Has the same priority as amounts payable to outside creditors of the partnership. c.Will not advance the time of payment to that…Answer if TRUE or FALSE. If the statement is FALSE provide at least a brief explanation why it's wrong. 1. Liquidation expenses which are incurred in the realization of non-cash assets affect cash but not partners' capital. 2. A partnership is generally liquidated when its term is terminated. 3. The outside creditors of the partnership have better claims over the personal assets of the partner. 4. Gains and losses arising from the sale of the assets in a partnership liquidation are always divided equally among partners.