1. S1: The personal assets of the partners are used first to settle their personal obligations before they are used to satisfy the claims of the partnership creditors. S2: An industrial partner is exempted to share for the losses of the business and is not required to contribute additional cash in case of insolvency of the partnership. a. Both statements are correct b. Both statements are incorrect c. Only S1 is correct. d. Only S1 is incorrect.
1. S1: The personal assets of the partners are used first to settle their personal obligations before they are used to satisfy the claims of the partnership creditors. S2: An industrial partner is exempted to share for the losses of the business and is not required to contribute additional cash in case of insolvency of the partnership. a. Both statements are correct b. Both statements are incorrect c. Only S1 is correct. d. Only S1 is incorrect.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1. S1: The personal assets of the partners are used first to settle their personal obligations before they are used to satisfy the claims of the partnership creditors. S2: An industrial partner is exempted to share for the losses of the business and is not required to contribute additional cash in case of insolvency of the partnership.
a. Both statements are correct
b. Both statements are incorrect
c. Only S1 is correct.
d. Only S1 is incorrect.
2. S1: In liquidation process, the noncash assets are sold only to outside parties but never to any of the partners. S2: An insolvent partners’ capital deficiency can be solved by his additional cash contribution.
a. Both statements are correct
b. Both statements are incorrect
c. Only S1 is correct.
d. Only S1 is incorrect.
3. S1: Dissolution and liquidation are different. S2: In the liquidation of a business the owners’ claims are settled simultaneously with the creditors’ claim.
a. Both statements are correct
b. Both statements are incorrect
c. Only S1 is correct.
d. Only S1 is incorrect.
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