A New Partner Was Admitted, but the Assets Weren't Revalued

question 22

Multiple Choice

A new partner was admitted, but the assets weren't revalued. A revaluation would have decreased the equity of the partner and partnership. This error would cause:

• A) the future periods' net income to be understated.
• B) the future periods' net income to be overstated.
• C) this period's end assets to be understated.
• D) the new partner's capital to be overstated.

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Definitions:

Total Revenues

The overall income generated by a firm or economy from its business activities, including sales of goods and services, before any expenses are deducted.

Marginal Returns

The additional output that is produced by using one more unit of a variable resource, keeping all other inputs constant.

Nonlabor Resources

are inputs in the production process that are not related to work or effort by employees, such as capital, land, and materials.

Diminishing

Refers to the principle where increasing one input, while holding others constant, will eventually yield lower per-unit returns.