PARTNERSHIP LIQUIDATION AND DISSOLUTION - POST EXAMINATION

1. What is the first step in the liquidation of a partnership?

• Determine the partner's capital balances
• Distribute cash to partners
• Sell partnership assets
• Pay off partnership liabilities

2. That is the formula for calculating a partner's capital balance in a liquidation?

• Total partnership assets / Number of partners
• Total partnership liabilities - Total partnership assets
• Total partnership assets - Total partnership liabilities
• Total partnership liabilities / Number of partners

3. What is the effect of admitting a new partner on the existing partners' profit/loss sharing ratios?

• The existing partners' profit/loss sharing ratios remain the same
• The existing partners' profit/loss sharing ratios increase
• The existing partners' profit/loss sharing ratios decrease
• The existing partners' profit/loss sharing ratios become zero

4. What is the book value method for calculating a new partner's capital balance?

• The new partner's capital balance is equal to the total partnership assets
• The new partner's capital balance is equal to the total partnership liabilities
• The new partner's capital balance is equal to the total partnership assets minus the total partnership liabilities
• The new partner's capital balance is equal to the total partnership assets divided by the number of partners

5. What is the bonus method for calculating a new partner's capital balance?

• The new partner's capital balance is equal to the total partnership assets
• The new partner's capital balance is equal to the total partnership liabilities
• The new partner's capital balance is equal to the total partnership assets minus the total partnership liabilities
• The new partner's capital balance is equal to the total partnership assets plus a bonus

6. What is the formula for calculating the amount to distribute to a solvent partner in a liquidation?

• Total partnership assets / Total partnership liabilities
• Total partnership liabilities / Total partnership assets
• Total partnership assets - Total partnership liabilities
• Total partnership liabilities - Total partnership assets

7. What is the formula for calculating the amount to distribute to an insolvent partner in a liquidation?

• Total partnership assets / Total partnership liabilities
• Total partnership liabilities / Total partnership assets
• Total partnership assets - Total partnership liabilities
• Total partnership liabilities - Total partnership assets

8. What is the difference between a solvent and an insolvent partner in a liquidation?

• A solvent partner has a positive capital balance, while an insolvent partner has a negative capital balance
• A solvent partner has a negative capital balance, while an insolvent partner has a positive capital balance
• A solvent partner has a positive net worth, while an insolvent partner has a negative net worth
• A solvent partner has a negative net worth, while an insolvent partner has a positive net worth

9. What is the difference between the book value method and the bonus method for calculating a new partner's capital balance?

• The book value method subtracts the total partnership liabilities from the total partnership assets, while the bonus method adds a bonus to the total partnership assets
• The book value method adds a bonus to the total partnership assets, while the bonus method subtracts the total partnership liabilities from the total partnership assets
• The book value method subtracts the total partnership assets from the total partnership liabilities, while the bonus method adds a bonus to the total partnership liabilities
• The book value method adds a bonus to the total partnership liabilities, while the bonus method subtracts the total partnership assets from the total partnership liabilities

10. What is the effect of admitting a new partner on the existing partners' capital balances?

• The existing partners' capital balances remain the same
• The existing partners' capital balances increase
• The existing partners' capital balances decrease
• The existing partners' capital balances become zero