Which of the following will not result in the dissolution of partnership?

-Partners realize that the profit figures have failed to reach the target levels.

When an incoming partner is admitted into a partnership, and the new partner’s contributed capital is
less than the capital credited to his/her account, which of the fg explains the difference?

-There is goodwill credited in the new partners account

When new incoming partners is admitted into a partnership, and upon admission , the adjustment
shows that the capital of the old partners decreases, which of the fg adjustment explains the reason for
such decrease?

-Undervalued liabilities were written upward to their fair market values

If the old existing partners receive a bonus from a new incoming partner upon admission to the
partnership, the bonus iis allocated to

-The existing partners in their profit or loss

When a partner retires from the partnership and the retiring partner’s settlement price is more than the
adjusted balance, which of the fg will explain the difference?

-The retiring partner is receiving a bonus from the remaining partners

-The retiring partner’s goodwill is being recognized

When a new partner is admitted into the partnership and the old partners’ goodwill is recognized, the
goodwill is allocated to

-Neither

Which of the fg statement is correct in accordance with the rule of marshalling of assets?

-Personal creditors have first claim to personal assets of the partner

-Partnership creditors have first claim to partnership assets

The rank order for claims against a bankrupt partner of

- Those owing to separate creditor

- Those owing to partnership credtors
- Those owing to partners by way of contri

Offsetting of a partner’s loan balance against his deficit capital is referred to as the

-Right of offset

If a partner with a debit capital balance during liquidation is personally solvent,

-The partner with deficit balance will invest additional asset into the partnership

TorF

Under the bonus method, when a new partner is admitted to the partnership, the total capital of the
new partnership is equal to the book value of the previous partnership plus the fair market value of the
consideration paid to the existing partnership by the incoming partner. TRUE

When a new partner is admitted to a partnership under the goodwill method, an original partner’s
capital account may be adjusted for his/her share of previously unrecorded intangible assets traceable
to the original partner. TRUE

A partnership’s assets must be revalued when a partner withdraws. FALSE

The fair market value of a partnership can be implied by the incoming partner’s market value of
consideration divided by the incoming partner’s percentage profit and loss. TRUE

If goodwill is traceable to the incoming partner, the new partner’s capital balance equals the book value
of the old partnership divided by the existing partner’s ownership percentage in the new partnership
minus the book value of the old partnership. FALSE

In partnership liquidation, safe payments is the amount of distribution that can be made to partners
with assurance that such amounts will not have to be returned to the partnership. TRUE

A partnership installment liquidation generally results in the partnership receiving more cash when
assets are sold because owners can avoid selling quickly. TRUE
The loss absorption power computed when preparing cash distribution plan for partnership liquidation
indicates the amount of loss the partnership expects to incur during the liquidation FALSE

A partner is considered the most vulnerable as a result of a computation of vulnerability rankings if such
partner has the lowest vulnerability ranking, who also has the highest loss absorption potential. FALSE

Accounting transactions concerning remaining unpaid debts settled and the distribution of any
remaining assets to the partners based on their profit and loss ratio are not recorded by any accountant
during liquidation TRUE

In accounting for partnership liquidation cash payments to partners offer all creditors claims have been
satisfied but before the final distribution should be according to the partners’ relative profit and loss
sharing ratio FALSE

A partners’ capital interest is a claim against the net assets of the partnership as shown by the balance in
the partner’s capital account TRUE

If the partners’ interest is greater than P/L ratio is more advantageous to use goodwill method over
bonus method to the new partner in recording his/ her admission TRUE

The first step in liquidation process is to realization of non cash assets FALSE

The first step in preparing the cash distribution plan is to determine the loss absorption capacity of each
partner. FALSE