When a Partner Withdraws from the Firm Which of the Following

question 178

Short Answer

When a partner withdraws from the firm which of the following reflects the correct partnership effects? $\quad$ $\quad$ $\quad$ $\quad$$\begin{array}{cc}&\text { Payment from } & \text { Payment from } \\& \underline{\text { Partners' Personal Assets}}& \underline{ \text { Partnership Assets }} \\\end{array}$
A) $\begin{array}{ccc}\text { Total net assets } && \text { decreased } &&&&& \text { decreased } \\\end{array}$
B) $\begin{array}{ccc}\text { Total capital } &&& \text { decreased } &&&&& \text { decreased } \\\end{array}$
C) $\begin{array}{ccc}\text { Total net assets } && \text { unchanged } &&&& \text { decreased } \\\end{array}$
D) $\begin{array}{ccc}\text { Total capital } &&& \text { unchanged } &&&& \text { unchanged }\end{array}$

• A)\(\begin{array}{ccc}
• \text { Total net assets } && \text { decreased } &&&&& \text { decreased } \\\end{array}\)
• B)\(\begin{array}{ccc}\text { Total capital } &&& \text { decreased } &&&&& \text { decreased } \\\end{array}\)
• C)\(\begin{array}{ccc}\text { Total net assets } && \text { unchanged } &&&& \text { decreased } \\\end{array}\)
• D)\(\begin{array}{ccc}\text { Total capital } &&& \text { unchanged } &&&& \text { unchanged }
• \end{array}\)

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Definitions:

Usury Law

Legal regulations that cap the maximum interest rate that can be charged on loans, intended to protect consumers from excessively high rates.

Maximum Interest Rate

The highest rate of interest that can be charged on loans and credit products, often regulated by law to protect consumers from excessively high rates.

Federal Funds Rate

The interest rate that U.S. banks and other depository institutions charge one another on overnight loans made out of their excess reserves.

Economic Profits

The surplus left after a firm has deducted all its costs, including opportunity costs, from its total revenues.