1. Write the characteristics of a partnership business. 2. Write the advantage and disadvantage of partnership business,separately. 1.

A partnership may be liquidated if: A. B. C. D. E. The objectives sought in forming the partnership have been achieved. the time period for which the partnership was formed expires (ends) newly enacted laws have made the partnerships activities illegal, the partnership becomes bankrupt All of the above

2. The term given for the sale of non-cash assets at the time of liquidation of a partnership is known as: a. Realization d. capital deficiency b. Partner e. none of the above c. Dissolution 3. Which one of the following item is not a considered as a component Income of a partnership? a. return to the partners for the use of their capital called interest on partners capital, b. compensation for direct services the partners have rendered called partners salaries, and c. income for any special characteristics individual partners may bring to the partnership d. None of the above e. All of the above 4. Dissolution of a partnership occurs when: a. A partner withdraws from partnership b. A partner dies c. A new partner enters d. A partnership liquidates e. All of the above 5. The process of ending a partnership business, through selling enough assets to pay the partnerships liabilities, and distributing any remaining assets among the partners could be termed as: a. Liquidation b. Partnership formation c. Partnership association d. Partnership reformation e. None of the above

Assume that Rainbow, Semere, and Tassew had total of birr 85,000 non cash assets and sell all noncash assets for Birr 95,000. The gain is divided among Rainbow, Semere and Tassew in the income and loss sharing ratio of 40% 30%, and 30% respectively. The partnership had a total of birr 20,000 liabilities and birr 30,000 cash. Then, the liabilities are paid, and the remaining cash is distributed to the partners according to the balances in their capital accounts. Instruction: Make the journal entries to record the steps in the liquidation of a partnership business concerning :( 2.5 pts) a. b. c. d. The sale of non cash assets Gain or loss on sale of non cash assets Payment of liabilities Distribution of cash of partnership to partners.