ACCCOB1 (QUIZ 3) Flashcards
The definition of partnership is found in Article 1767 of the Civil Code of the Philippines
TRUE
A change in the business relationship of the partners causes dissolution which will lead to the shutting down of the business.
FALSE
Business may still continue
Withdrawal of a partner causes dissolution but the admission of a new partner does not
FALSE
Admission of a new partner causes dissolution
The causes of dissolution are enumerated in Article 1830 of the Civil Code of the Philippines.
TRUE
The insolvency of a partner may cause dissolution.
TRUE
Dissolution is the termination of the firm as a legal entity which means that dissolution and liquidation are
the same.
FALSE
They are not the same
A dissolved partnership may continue to conduct business under a new agreement.
TRUE
When the managing partner of a partnership withdraws, dissolution occurs and the dissolution of the
partnership discharges the existing liability of any partner.
FALSE
All liabilities must be paid by the partners
A new partner cannot be admitted into the partnership without the consent of all the partners
TRUE
. A purchased B’s P200,000 capital interest for P200,000, the ensuing entry on the books of the
partnership would contain a debit to cash for P200,000.
FALSE
Cash was not received by the partnership
In admission by purchase, payment is personally made to the partner from whom the interest is obtained
resulting to mere transfers among capital accounts.
TRUE
. Dissolution results when a partner dies and the remaining partners decide to discontinue the business
FALSE
Liquidation happens when the business is discontinued
If a partner withdraws by selling his equity interest to the partnership in exchange for an amount greater
than the balance in his capital account, the excess payment will be treated as a bonus to the continuing
partners.
FALSE
Bonus to the retiring partner
The retirement of a partner by payment from partnership assets may cause the other partners’ capital
accounts to decrease
TRUE
Total contributed capital is the sum of the capital balances of the old partners and the actual investment of
the new partner.
TRUE
Which is not a cause of distribution?
A. Admission of a new partner
B. Retirement of a new partner
C. Annulment of a partner’s marriage
D. Death of a partner
C. Annulment of a partner’s marriage
When admitting a new partner by investment, a bonus to old partners
A. is usually unjustified because carrying values clearly reflect partnership net worth.
B. is sometimes justified because the old partners requested the new partner to join them.
C. results if the debit to cash is less than the new partner’s capital credit.
D. results if the debit to cash is higher than the new partner’s capital credit.
D. results if the debit to cash is higher than the new partner’s capital credit.
. A bonus to a new partner will
A. increase the capital balances of existing partners based on their profit ratios before the
admission of the new partner.
B. increase the capital balances of existing partners based on their profit ratios after the
admission of the new partner.
C. decrease the capital balances of existing partners based on their profit ratios before the
admission of the new partner.
D. decrease the capital balances of existing partners based on their profit ratios after the
admission of the new partner.
D. decrease the capital balances of existing partners based on their profit ratios after the
admission of the new partner
A joins the partnership of B and C by paying P30,000 in cash. If the net assets of the
partnership are still the same amount after A has been admitted as a partner, then A
A. must have been admitted by investment of assets.
B. must have been admitted by purchase of a partner’s interest.
C. must have received a bonus upon being admitted.
D. could have been admitted by an investment of assets or by a purchase of a partner’s interest.
B. must have been admitted by purchase of a partner’s interest.
When a partner withdraws from the firm and is paid from the remaining partners’ personal assets.
Which of the following reflects the correct partnership effects?
A. Total assets decrease
B. Total capital increase
C. Total liabilities increase
D. Total net assets are unchanged
D. Total net assets are unchanged
If a bonus is traceable to the old partners rather than to a new partner, it is allocated among the
partners according to the
A. capital ratio of the old partners.
B. capital ratio of the new partnership.
C. profit and loss ratio of the old partnership.
D. profit and loss ratio of the new partnership.
C. profit and loss ratio of the old partnership.
Which of the following results in the dissolution of a partnership?
A. The winding up of the partnership and the distribution of remaining assets to the partners.
B. The contribution of additional assets to the partnership by an existing partner.
C. The receipt of share in profit by an existing partner.
D. The withdrawal of a partner from a partnership
D. The withdrawal of a partner from a partnership.
Total partners’ equity will not change when a withdrawing partner
A. sells his interest to a new or remaining partner.
B. withdraws assets equal to his capital balance.
C. withdraws assets amounting to less than his capital balance.
D. withdraws assets amounting to greater than his capital balance.
A. sells his interest to a new or remaining partner.
When A retired from A, B and C, he received cash in excess of his capital account balance. Under
the bonus method, the excess received by A
A. had no effect on the capital account balances of B and C
B. reduced the capital account balances of B and C
C. increased the capital balances of B and C
D. was recognized as an operating expense of the partnership
B. reduced the capital account balances of B and C
