Cherryhill and Hace Had Been Partners for Several Years, and They

question 23

Multiple Choice

Cherryhill and Hace had been partners for several years, and they decided to admit Quincy to the partnership.The accountant for the partnership believed that the dissolved partnership and the newly formed partnership were two separate entities.What method would the accountant have used for recording the admission of Quincy to the partnership?

• A) The bonus method.
• B) The equity method.
• C) The goodwill method.
• D) The proportionate method.
• E) The cost method.

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Definitions:

Savings Account

A bank account where money is kept for savings purposes and earns interest over time.

Stated Interest Rate

The annual interest rate declared on a bond or loan, not accounting for compounding or the effect of any fees.

Chi-square

A statistical test used to examine the differences between categorical variables in a contingency table.