● Assuming that the first sale of other assets having book value of P150,000

realized P45,000 and all available cash is distributed, the partners would receive
Roger, P9,000; Sergio, P0; Tito, P63,00

1. Statement 1: A deficient and insolvent partner will still have a chance to receive cash
from the partnership if there is a loan payable to him which is higher than his capital
deficiency.
Statement 2: A deficient and limited partner who has a loan to the partnership can apply
the right of offset to eliminate his deficiency.
Both statements are true
Both statements are false
Only the first statement is true
Only the second statement is true

2. In lump-sum liquidation, capital deficiency resulting from division of loss from realization
must be eliminated before making any payment to partners. Any resulting capital
deficiency of an insolvent partner is eliminated by charging the capital accounts of the
remaining partners.
Both statements are true

3. Statement 1: A limited partner is liable only to the extent of his her contribution in the
partnership.
Statement 2: A limited partner can use the right of offset against his capital deficiency,
but he is not required to make additional contribution out of his/her personal properties.
Only the first statement is true

4. An entry is not required in the liquidation of a partnership to record the

Allocation of a capital deficiency to partners with credit balances when the
deficient partner is solvent

5. Statement 1: In case the partnership is insolvent, the general partners are liable to pay
the partnership creditors from his/her personal properties
Statement 2: A deficient partner may apply the right of offset to a loan balance owing to
him or her by the partnership.
Both statements are true

6. Statement 1: In the event of liquidation, outside creditors has priority claim over the
partnership assets.
Statement 2: When a partner becomes insolvent, the claim against his separate
properties shall be paid first to his personal creditors.
Both statements are true
7. In a cash priority program for use in installment liquidation, the partner with the highest
loss absorption balance is the most vulnerable partner. The amount of cash to be
distributed to partners in installment liquidation can be determined by preparing a cash
priority program.
Only statement 2 is true

8. A deficiency occurs for a partner when

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