acccob 1 quiz 3

In dissolution, the creditors of the previous partnership are replaced with new creditors given that a new partnership is already formed under a new partnership agreement.

• true

• false

Answer explanation

not necessary to replace creditors

When a partnership is dissolved, its legal life is terminated but its economic life continues. 

• True

• False

The partnership dissolution only happens when there is a violation of the partnership agreement.

• true

• false

Answer explanation

Dissolution happens even when there is no violation

Only voluntary causes, such as retirement, will lead to the dissolution of the partnership.

• True

• False

Answer explanation

even involuntary such as death

If there is an upward or downward asset revaluation, the allocation to the capital accounts will be based on the old profit or loss ratio of the partnership. 

• True

• False

Downward asset revaluation happens if the fair market value of the assets is less than its book value. 

• True

• False

Total Contributed Capital (TCC) is the total amount of new capital set or established by the partners for the partnership.

• True

• False

Answer explanation

TOTAL AGREED CAPITAL instead of Total Contributed Capital

Bonus refers to the transfer of capital from one partner to another in consideration for a good reputation or earning capacity of the latter. 

• True

• False

In dissolution, the capital account, instead of “Bonus”, is the account used to either debit or credit to record bonus to or from partners.

• True

• False

The capital interest of a partner who is selling his capital can sell at the amount equal to, higher than, or lower than the amount of capital on the book of partnership accounts.

• True

• False