Shaun and Rick Are Partners

question 8

Multiple Choice

Shaun and Rick are partners.Shaun has a capital balance of $9000 and Rick has a capital balance of $7000.Edwin invests a building with a current market value of $5000 to acquire an interest in the new partnership.Which of the following is true of the effect of the transaction on the balance sheet? (Assume no bonus to any partner. )

• A)Both assets and equity will decrease by $5000.
• B)Both assets and equity will increase by $5000.
• C)Both assets and liabilities will increase by $5000.
• D)Both assets and liabilities will decrease by $5000.

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Definitions:

Corporate Tax Evasion

The illegal practice of deliberately avoiding paying the rightful amount of taxes by corporations, often through dishonest reporting or other means.

Insider Trading

The trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public, material information about the company.

Distributive Justice

The perceived fairness of outcomes distributed among members of a group, including resources, rewards, and responsibilities.

Business Relationship

The interaction, connection, or association between two or more businesses that arises from commercial transactions or mutual business interests.