Nick Is Admitted to an Existing Partnership by Investing Cash

question 151

Multiple Choice

Nick is admitted to an existing partnership by investing cash. Nick agrees to pay a bonus for his ownership interest because of the past success of the partnership. When Nick's investment in the partnership is recorded,

• A) his capital account will be credited for more than the cash he invested
• B) his capital account will be credited for the amount of cash he invested
• C) a bonus will be credited for the amount of cash he invested
• D) a bonus will be distributed to the old partners' capital accounts

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Definitions:

Debits and Credits

The fundamental elements of accounting that represent the entries made in accounts to reflect increases or decreases in balances.

Memorized Transactions

Transactions that are saved in the accounting system for future use, allowing for quick recording of recurring expenses, invoices, or payments.

Saved Transactions

Transactions that have been recorded and stored in a financial system for future reference or use.

Vendors and Expenses

Categories within accounting that track and manage the costs incurred from purchasing goods or services from suppliers.