When a New Person Is Admitted into a Partnership by Investing

question 18

Multiple Choice

When a new person is admitted into a partnership by investing assets in the partnership at book value,the new person:

• A)pays cash directly to existing partners based on the market value of the partnership's assets.
• B)transfers assets to the partnership which are equal in value to the existing partners' capital balances (no bonus).
• C)pays cash directly to the existing partners in amounts equal to their respective capital balances.
• D)transfers assets to the partnership which are equal in value to the market value of the partnership's assets.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at any given time, including cash, coins, and balances held in checking and savings accounts.

Credit Cards

Financial instruments that allow holders to borrow funds to pay for goods and services with the expectation of repaying the loan with interest.

Debit Cards

Plastic payment cards that allow users to make transactions by deducting money directly from their checking account, rather than incurring debt like a credit card.

Money

A medium of exchange that is widely accepted in transactions for goods and services, acting as a unit of account, a store of value, and sometimes, a standard of deferred payment.