Chapter 4 5. ABC Co. has filed a petition for bankruptcy.

ABC will not liquidate but

will be administered by another party appointed by a court of law over
1. Which of the following does not relate to the liquidation of a partnership
the next 10 years. Which of the following best describes this event?
e. Conversion of the partner’s capital balances into ordinary share
d. Corporate rehabilitation

2. Which of the following has the least priority of payment in case of

partnership liquidation
d. The partner’s capital balances

3. A partner is considered insolvent if

d. His/her personal liabilities exceed personal assets

4. A and B are partners of AB Company which is undergoing liquidation. After

AB Company’s assets were realized and its liabilities settled, A’s capital
account has a negative balance. Which of the following statements is
correct?
d. B shall absorb A’s capital deficiency if a is insolvent

5. When making safe payments to the partners during installment liquidation

of a partnership which of the following statement is correct?
b. The carrying amount of unsold assets and any cash retention for
future costs are treated as a loss

Chapter 5

1. Which of the following is not a correct classification of assets in the

statement of affairs?
d. Current assets

2. In the statement of affairs, assets are measured at

a. realizable value

3. It is the initial report prepared at the start of the liquidation process.

b. Statement of realization and liquidation

4. The estimated deficiency to unsecured creditors without priority is

computed as:
a. net free assets less total unsecured liabilities without priority