Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 12, Problem 10DQ
To determine
Whether the given information relieve Person KY of liability.
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In a partnership, a capital deficiency occurs for a partner when
Options:
• His share in the losses of the partnership is more than his capital balance
• Loan payable by the partnership to him greater than his capital balance
• His solvency is lesser than his capital balance
• His personal assets are less than his personal liabilities
During a liquidation, if a partner’s capital account balance drops below zero, what Should Happen?
The other partners file a legal suit against the partner with the deficit balance.
The partner with the highest capital balance contributes sufficient assets to eliminate the deficit.
The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses.
The partner with a deficit contributes enough assets to offset the deficit balance.
Which of the following is a disadvantage of general partnerships?
( a) The partners in a general partnership are exposed to double taxation.
( b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general
partnership are the most extensive.
( c) A partner who withdraws from a partnership cannot be held liable for any debts the furm had at the time of
withdrawal.
( d) All general partners have unlimited liability for the debts and obligations of their business.
Chapter 12 Solutions
Principles of Financial Accounting.
Ch. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQ
Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - The Field, Brown Snow partnership was begun with...Ch. 12 - Prob. 10QSCh. 12 - Determine whether each characteristic describes a...Ch. 12 - For each separate case, indicate which type of...Ch. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 1APCh. 12 - Prob. 2APCh. 12 - Prob. 3APCh. 12 - Prob. 4APCh. 12 - Prob. 5APCh. 12 - Prob. 6APCh. 12 - Prob. 1BPCh. 12 - Prob. 2BPCh. 12 - Prob. 3BPCh. 12 - Prob. 4BPCh. 12 - Prob. 5BPCh. 12 - Prob. 6BPCh. 12 - Prob. 12SPCh. 12 - Prob. 1AACh. 12 - Prob. 2AACh. 12 - Review Samsungs 1938 to 1970 history at...Ch. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 5BTN
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- If a retiring partner agrees to withdraw less than the book value of his/her interest, the effect of this transaction will decrease the capital account of the remaining partnesarrow_forward1. In a partnership liquidation the realization losses result in a debit balance in one partners’ capital account. If this partner fails to contribute personal assets to make up this deficit, how should the debit balance be handled by the partners? a. It should be written off against partnership profits like any other bad debt. b. It should be allocated to all the partners in their profit and loss ratio. c. It should be allocated to the remaining partners in their remaining P and L ratio. d. It should be set up as a receivable and turned over to a collection agency. 2. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance…arrow_forwardIn the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?arrow_forward
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- Potential partners might not want to form a partnership because of the risk of having their personal property forfeited in favor of the business’s creditors. True or Falsearrow_forwardA disadvantage that is NOT peculiar to the partnership form of organization includes a.the interest of a partner in the partnership cannot be transferred without the consent of the other partners. b.termination of the partnership agreement, bankruptcy of the firm, or death of one of the partners dissolves the partnership. c.each partner is individually liable for all of the debts of the partnership. d.the partners do not make the decisions that run the business.arrow_forwardA firm in which A, B and C were partners, placed an order with D for supplying certain goods on credit. Before D could supply the goods C died. D supplied the goods after C’s death, being totally ignorant about the fact. A and B subsequently became insolvent. Can D make C’s estate liable for his debt.arrow_forward
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