A Partner Contributes, as Part of Her Initial Investment, Accounts

question 84

Multiple Choice

A partner contributes, as part of her initial investment, accounts receivable with an allowance for doubtful accounts. Which of the following reflects a proper treatment?

• A) The allowance for doubtful accounts should be recorded at its fair value.
• B) The allowance account may be set up on the books of the partnership because it relates to the existing accounts that are being contributed.
• C) The allowance account should not be carried onto the books of the partnership.
• D) The accounts receivable and allowance should not be recorded on the books of the partnership because a partner must invest cash in the business.

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Definitions:

Cost of Goods Manufactured

The aggregate expense of finished goods within a certain timeframe, encompassing materials, workforce, and indirect costs.

Work in Process Inventory

Inventory at various stages of production, not yet completed but undergoing manufacturing processes.

Raw Materials

Basic materials and substances used in the initial stages of the production process, destined to be transformed into finished goods.

Direct Labour

The cost of workers who are directly involved in the production of goods or services.