Partnership Dissolution Online Game

1. It refers to the change in the relation of the partners caused by any partner ceasing to be associated in the carrying out of the business.

• Partnership Formation

• Partnership Operation

• Partnership Dissolution

• Partnership Liquidation

A partnership is dissolved in any of the following cases, except:

• None of the given choices

• Admission of a new partner by investment

• Bankruptcy of a partner

• Incorporation of a partnership

• Death of a partner

For admission of a new partner by purchase, if the amount paid is less than the capital credited, the journal entry will be the same as if the amount paid is equal to the fair value of the interest purchased.

• True

• False

In admitting a new partner by investment, the purchase of interest is a personal transaction of the old partners with the new one. Thus, the partnership is not involved and in the partnership books, only a transfer of capital is recorded.

• True

• False

When the total agreed capital is greater than the total contributed capital, there is a negative asset revaluation.

• True

• False

Assume that A and B are partners in NBC Partnership with capital balances of P200,000 andP100,000, respectively. They share profits and losses equally. C is to be admitted to the partnership. Assume that he is to invest P100,000 for a 20% interest. Bonus to new partner is 20,000.

• True

• False

When the bonus method is used in accounting for admission of a partner by investment, we assume that the total agreed capital is equal to the total contributed capital.

• True

• False

Assume that A and B are partners in NBC Partnership with capital balances of P200,000 andP100,000, respectively. They share profits and losses equally. C is to be admitted to the partnership. Assume that he is to invest P100,000 and is credited for P80,000, which is to be a 25% interest of the new firm. The total interest percentage of A after the admission is 21.875%.

• True

• False

Liquidation is preceded by dissolution, but dissolution does not always lead to liquidation.

• True

• False

Assume that A and B are partners in NBC Partnership with capital balances of P200,000 andP100,000, respectively. They share profits and losses equally. C is to be admitted to the partnership. Assume that he is to invest P100,000 for a 20% interest. Partnership capitalization is P400,000 %. The total capital balance of C is P80,000.

• True

• False