29 Jun Question 1. Callie was admitted to t
Question
1. Callie was admitted to the Adams & Beal Partnership four years ago. The partnership has a deficiency at year end for the current year. How could this deficiency be accounted for?
-Use the profit and loss ratios to absorb the deficiency
-Do not account for the loss in the year incurred, it can be offset against income in future years
-Do not account for the loss in the year incurred, it could be offset against income in future years or carried back to offset income in prior years
-Losses are not passed on to individual partners in a partnership
2.
The following is the priority sequence in which liquidation proceeds will be distributed for a partnership
-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
3.
Which of the following statements is correct regarding a partner’s debit capital balances?
-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
4.
In a lump-sum liquidation of a partnership
-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
5.
When a partner withdraws from a partnership and the remaining partners acquire that interest
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