Shaun and Rick Are Partners

question 6

Multiple Choice

Shaun and Rick are partners. Shaun has a capital balance of $10,000 and Rick has a capital balance of $8,000. Edwin invests a building with a current market value of $6,000 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 increase by $6,000.
• B)Both assets and liabilities will decrease by $6,000.
• C)Both assets and equity will decrease by $6,000.
• D)Both assets and liabilities will increase by $6,000.

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Definitions:

Personality

The combination of characteristics or qualities that form an individual's distinctive character and behavioral patterns.

Fixed Investments

Long-term expenditures on physical assets like plant, property, and equipment, which are not easily liquidated.

Habit

A settled or regular tendency or practice, especially one that is hard to give up, often performed unconsciously.

Organizational Development

A domain focused on enhancing individuals' understanding and efficiency in achieving improved organizational transformation and performance through research, theoretical development, and practical application.