Partnership Liquidation

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

• dissolution

• liquidation

• incorporation

• recognition

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

• realization

• net proceeds

• gain from sale

• loss from sale

Lump sum liquidation is the process where partners receive cash as it becomes available.

• True

• False

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:

• capital deficiency

• right of offset

• loss on realization

• balance payment

If A's capital is deficient, but there is a loan payable to B, the right of offset can be applied.

• True

• False

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

• False

The feature of unlimited liability covers all partners.

• True

• False

A deficiency occurs for a partner when

• his personal assets are less than his personal liabilities

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

• his personal assets are lesser than his capital balance

• loan payable by the partnership to him is greater than his capital balance

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

• True

• False

Limited partners will not be required to pay for any deficiencies.

• True

• False