When an Existing Partner Sells His Interest to Another Party

question 134

Multiple Choice

When an existing partner sells his interest to another party in a personal transaction:

• A)it is considered a transaction between the partnership and the new party.
• B)the old partnership will continue functioning, since the partner is replaced by another party without diluting the old partnership.
• C)the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital.
• D)the equity and assets in the balance sheet increase by the same amount.

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Definitions:

Cash Payment

A transaction in which goods or services are paid for using physical currency or digital equivalents, immediately transferring value.

Wages

Compensation paid to employees for their labor, typically calculated on an hourly, daily, or piecework basis.

Financial Statements

Financial Statements are formal records of the financial activities and position of a business, person, or entity, including the balance sheet, income statement, and cash flow statement.

Attached Schedule

A supplementary document provided with financial statements or tax returns that provides additional details or calculations related to the main document.