When a New Partner Pays a Bonus to Join an Existing

question 68

True/False

When a new partner pays a bonus to join an existing partnership,the bonus amount is recorded as a gain on the partnership books.

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Definitions:

Physical Form

Physical form refers to the tangible appearance or structure of an item, indicating its material composition and physical characteristics.

Long-term

Pertains to assets, liabilities, investments, or obligations that are expected to be resolved or realized beyond one year.

Income Summary

The income summary account is used in the closing process of accounting to summarize revenue and expenses for a specific period, helping determine the net income or loss.

Permanent Account

An account that is not closed at the end of the accounting period and whose balances are carried forward to the next period, such as assets, liabilities, and equity accounts.