In preparing the cash priority program, the maximum loss absorption can be derived by*

1 point

a. Multiplying the total interest of the partner in the partnership by his profit and loss percentage

b. Multiplying the capital balance of the partner by his profit and loss percentage

c. Dividing the total interest of the partner in the partnership by his profit and loss percentage

d. Dividing the capital balance of the partner by his profit and loss percentage

What is a cash priority program?*

1 point

a. A guideline for the cash distributions made to partners during a liquidation

b. A list of the rules to be performed during a partnership dissolution

c. A list of the transactions that will transpire in the reorganization of a partnership

d. None of the above

Under the bonus method, which of the following best describes the effect on "Net Assets" and "Total Capital" of an admission of a new partner when he invests an amount larger than his capital credit?*

1 point

a. No effect, increase

b. Increase, increase

c. Decrease, decrease

d. No effect, no effect

When a partner withdraws taking assets that are less than his capital balance,*

1 point

a. the remaining partners receive a bonus

b. no bonus results.

c. the remaining partners owe the withdrawing partner the difference.

d. the withdrawing partner receives a bonus

Which would lead to a legal dissolution of a partnership?*

1 point

a. Demise of a partner

b. Withdrawal of a partner

c. Admission of a partner

d. All of the above

Which of the following is not a valid cause for partnership dissolution?*

1 point

a. retirement of one of the partners

b. admission of new partner

c. death of a partner

d. marriage between partners

A partnership is said to be insolvent when*

1 point

a. At least one partner is insolvent

b. At least one partner's capital account has a credit balance

c. Its liabilities exceed its assets

d. Its assets exceeded its liabilities

Assets need to be reappraised when*

1 point

a. a new partner is admitted to the partnership through purchase of interest,

b. a partner leaves the partnership.

c. profits and losses are being distributed.

d. the partnership is liquidated

In installment liquidation computation, a partnership loan payable to the partner is*

1 point

a. Added to the other regular liabilities of the partnership

b. Added to the balance in the partner's capital account

c. Deducted from the balance in the partner's capital account

d. Ignored during the calculation

In installment liquidation, each cash installment is distributed:*

1 point

a. In the partner's profit and loss ratio

b. In the ratio of partner's capital account balances

c. As agreed to by the partners

d. As if no more cash would be collected anymore