Question 1

The Revised Uniform Partnership Act specifies that the order of payment to creditors and partners during the liquidation process is as follows:
a. __________________________________________.
b. __________________________________________.
c. __________________________________________.

Accepted Answer

a. partnership creditors other than partners
b. partners' loans-if subordinated
c. partners' capital

Question 2

A historical statement prepared in a partnership liquidation is the ______________ _________________________________.

Accepted Answer

statement of realization and liquidation

Question 3

A schedule used in connection with the liquidation of a partnership that is prepared each time cash becomes available for distribution to partners is the ____________________________________.

Accepted Answer

schedule of safe payments

Question 4

A procedure that was discarded by the Revised Uniform Partnership Act in which partnership assets are deemed a separate pool of assets, as are each partner's personal assets, is the ___________________________________________.

Accepted Answer

The answer of A procedure that was discarded by the...

Question 5

In the liquidation of a partnership, the subtraction of a partner's capital deficit balance against the balance of any loan outstanding to the partnership is referred to as the _________________________________.

Accepted Answer

The answer of In the liquidation of a partnership, the...

Question 6

If a partner absorbs the deficit balance in another partner's capital account during liquidation, then the absorbing partner has ______________________________ the insolvent partner.

Accepted Answer

The answer of If a partner absorbs the deficit balance...

Question 7

The manner of distributing cash to partners in the liquidation process has the end result of ___________________________________.

Accepted Answer

The answer of The manner of distributing cash to partners...

Question 8

Under the Revised Uniform Partnership Act, gains and losses during liquidation are allocated among the partners differently from preliquidation profits and losses.

Accepted Answer

The answer of Under the Revised Uniform Partnership Act, gains...

Question 9

If partners agree to allocate liquidation gains and losses differently from the manner set forth in the Revised Uniform Partnership Act, they may do so.

Accepted Answer

Partners can agree to allocate liquidation gains and losses in a manner different from that prescribed by the Revised Uniform Partnership Act, as partnership agreements can specify terms that override default provisions of the Act.

Question 10

If a partnership agreement provides that capital balances are to be maintained in accordance with the profit and loss ratio, then a partner cannot ever be put in the position of having to absorb more than his or her share of the liquidation losses.

Accepted Answer

The allocation of liquidation losses according to the profit and loss ratio does not prevent a partner from absorbing more than their share of losses if other partners are unable to meet their obligations, leading potentially to one partner covering more than their initial share of losses.

Question 11

When a partnership has a loan outstanding to a partner, the marshalling of assets principle requires that the receivable be written off against the partner's capital account in liquidation.

Accepted Answer

The marshalling of assets principle does not specifically require that a loan to a partner be written off against the partner's capital account in liquidation. Instead, it involves the orderly distribution of assets to satisfy debts and obligations.

Question 12

In partnership liquidations, a loan by a partner to a partnership is substantively treated as a part of the capital of that partner.

Accepted Answer

A loan by a partner to a partnership is considered a capital contribution and is treated as part of the partner's capital account.

Question 13

The statement of realization and liquidation is a historical schedule.

Accepted Answer

The statement of realization and liquidation is a historical schedule because it records the process of converting assets into cash and settling liabilities during the liquidation of a company, reflecting past financial activities.

Question 14

Under the rule of setoff, a partner who has to absorb the deficit balance of another partner has legal recourse against the partner.

Accepted Answer

The answer of Under the rule of setoff, a partner...

Question 15

Under the marshalling of assets principle (no longer used) partnership creditors have first priority, partners' loans have second priority, and partners' capital has third priority as to the right to partnership assets.

Accepted Answer

The answer of Under the marshalling of assets principle (no...

Question 16

In a liquidation in which the two worst-case assumptions are being applied, a partner who has a deficit balance as a result of applying these assumptions is required to make a capital contribution if he or she cannot make good the deficit through the right of setoff.

Accepted Answer

The answer of In a liquidation in which the two...

Question 17

No need exists to apply the two worst-case assumptions if a cash distribution plan is prepared.

Accepted Answer

A cash distribution plan is a financial plan that outlines how a company will distribute its cash to its shareholders. The two worst-case assumptions that are typically applied to cash distribution plans are that the company will not be able to generate enough cash to meet its obligations and that the company's stock price will decline. However, if a cash distribution plan is prepared, these two assumptions do not need to be applied because the plan will already take into account the company's financial situation and the potential risks involved.

Question 18

_____ The Revised Uniform Partnership Act contains

Accepted Answer

The Revised Uniform Partnership Act does not specifically contain the rule of setoff, the use of a cash distribution plan, the marshalling of assets principle, or the special profit and loss sharing method. These are more specific financial or legal principles that might be applied within the context of partnership operations or disputes but are not explicitly outlined in the Act itself.

Question 19

_____ Under the Revised Uniform Partnership Act, gains and losses incurred on the realization of assets are to be allocated among the partners

Accepted Answer

Under the Revised Uniform Partnership Act, gains and losses incurred on the realization of assets are to be allocated among the partners in their normal profit and loss sharing ratio. This is the standard method unless the partnership agreement specifies otherwise.

Question 20

_____ Under the rule of setoff,

Accepted Answer

Under the rule of setoff, a partner's loan to a partnership can be used to offset a capital deficit in that partner's capital account.

Quiz 22: Partnerships: Liquidations

The Revised Uniform Partnership Act specifies that the order of payment to creditors and partners during the liquidation process is as follows: a. . b. . c. __.

A historical statement prepared in a partnership liquidation is the ___________________.

A schedule used in connection with the liquidation of a partnership that is prepared each time cash becomes available for distribution to partners is the ____________________________________.

A procedure that was discarded by the Revised Uniform Partnership Act in which partnership assets are deemed a separate pool of assets, as are each partner's personal assets, is the ___________________________________________.

In the liquidation of a partnership, the subtraction of a partner's capital deficit balance against the balance of any loan outstanding to the partnership is referred to as the _________________________________.

If a partner absorbs the deficit balance in another partner's capital account during liquidation, then the absorbing partner has ______________________________ the insolvent partner.

The manner of distributing cash to partners in the liquidation process has the end result of ___________________________________.

Under the Revised Uniform Partnership Act, gains and losses during liquidation are allocated among the partners differently from preliquidation profits and losses.

If partners agree to allocate liquidation gains and losses differently from the manner set forth in the Revised Uniform Partnership Act, they may do so.

If a partnership agreement provides that capital balances are to be maintained in accordance with the profit and loss ratio, then a partner cannot ever be put in the position of having to absorb more than his or her share of the liquidation losses.

When a partnership has a loan outstanding to a partner, the marshalling of assets principle requires that the receivable be written off against the partner's capital account in liquidation.

In partnership liquidations, a loan by a partner to a partnership is substantively treated as a part of the capital of that partner.

The statement of realization and liquidation is a historical schedule.

Under the rule of setoff, a partner who has to absorb the deficit balance of another partner has legal recourse against the partner.

Under the marshalling of assets principle (no longer used) partnership creditors have first priority, partners' loans have second priority, and partners' capital has third priority as to the right to partnership assets.

In a liquidation in which the two worst-case assumptions are being applied, a partner who has a deficit balance as a result of applying these assumptions is required to make a capital contribution if he or she cannot make good the deficit through the right of setoff.

No need exists to apply the two worst-case assumptions if a cash distribution plan is prepared.

_____ The Revised Uniform Partnership Act contains

_____ Under the Revised Uniform Partnership Act, gains and losses incurred on the realization of assets are to be allocated among the partners

_____ Under the rule of setoff,

Quiz 22: Partnerships: Liquidations

The Revised Uniform Partnership Act specifies that the order of payment to creditors and partners during the liquidation process is as follows: a. __________________________________________. b. __________________________________________. c. __________________________________________.

A historical statement prepared in a partnership liquidation is the ______________ _________________________________.

A schedule used in connection with the liquidation of a partnership that is prepared each time cash becomes available for distribution to partners is the ____________________________________.

A procedure that was discarded by the Revised Uniform Partnership Act in which partnership assets are deemed a separate pool of assets, as are each partner's personal assets, is the ___________________________________________.

In the liquidation of a partnership, the subtraction of a partner's capital deficit balance against the balance of any loan outstanding to the partnership is referred to as the _________________________________.

If a partner absorbs the deficit balance in another partner's capital account during liquidation, then the absorbing partner has ______________________________ the insolvent partner.

The manner of distributing cash to partners in the liquidation process has the end result of ___________________________________.

Under the Revised Uniform Partnership Act, gains and losses during liquidation are allocated among the partners differently from preliquidation profits and losses.

If partners agree to allocate liquidation gains and losses differently from the manner set forth in the Revised Uniform Partnership Act, they may do so.

If a partnership agreement provides that capital balances are to be maintained in accordance with the profit and loss ratio, then a partner cannot ever be put in the position of having to absorb more than his or her share of the liquidation losses.

When a partnership has a loan outstanding to a partner, the marshalling of assets principle requires that the receivable be written off against the partner's capital account in liquidation.

In partnership liquidations, a loan by a partner to a partnership is substantively treated as a part of the capital of that partner.

The statement of realization and liquidation is a historical schedule.

Under the rule of setoff, a partner who has to absorb the deficit balance of another partner has legal recourse against the partner.

Under the marshalling of assets principle (no longer used) partnership creditors have first priority, partners' loans have second priority, and partners' capital has third priority as to the right to partnership assets.

In a liquidation in which the two worst-case assumptions are being applied, a partner who has a deficit balance as a result of applying these assumptions is required to make a capital contribution if he or she cannot make good the deficit through the right of setoff.

No need exists to apply the two worst-case assumptions if a cash distribution plan is prepared.

_____ The Revised Uniform Partnership Act contains

_____ Under the Revised Uniform Partnership Act, gains and losses incurred on the realization of assets are to be allocated among the partners

_____ Under the rule of setoff,

The Revised Uniform Partnership Act specifies that the order of payment to creditors and partners during the liquidation process is as follows: a. . b. . c. __.

A historical statement prepared in a partnership liquidation is the ___________________.