The following is the priority sequence in which liquidation proceeds will be dis

Question

The following is the priority sequence in which liquidation proceeds will be distributed for a partnership

Answer

partnership drawings, partnership   liabilities, partnership loans, partnership capital balances

partnership liabilities,   partnership loans, partnership capital balances

partnership liabilities,   partnership loans, partnership drawings, partnership capital balances

partnership liabilities,   partnership capital balances, partnership loans

1.       

Which of the following statements is correct regarding a partner's debit capital balances?

Answer

The partner should make   contributions to reduce the debit balance to whatever extent possible

If contributions are not possible,   the other partners with credit capital balances will be allocated a portion   of the debit balance based on their proportionate profit-and-loss-sharing   percentages

Partners who absorb another's   debit capital balance have a legal claim against the deficient partner

All of these statements are   correct

1.       

In a lump-sum liquidation of a partnership

Answer

all assets are paid to the   partners based on their initial contribution, with the oldest partnering   being paid back first

all assets are paid to the   partners based on an equal distribution regardless of when the partner was   admitted to the partnership

all assets must be realized   before any distribution can be made

all assets are paid to the   partners, at the same time,  based the fair market value at the time   they were initial donated to the partnership

1.       

When a partner withdraws from a partnership and the remaining partners acquire that interest

Answer

this may have an effect on the   liquidity of the partnership

this will increases the cash flow   into the partnership

this will always create goodwill   for an amount equal to the withdrawing partner

  

     

partnership drawings, partnership   liabilities, partnership loans, partnership capital balances

     

     

partnership liabilities,   partnership loans, partnership capital balances

     

     

partnership liabilities,   partnership loans, partnership drawings, partnership capital balances

     

     

partnership liabilities,   partnership capital balances, partnership loans

  

Explanation / Answer

1.) partnership liabilities, partnership loans, partnership capital balances

2.)All of these statements are correct

3.)all assets must be realized before any distribution can be made

4.)this will always create goodwill for an amount equal to the withdrawing partner

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