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:

Primary Value Chain

The sequence of activities an organization undertakes to develop, produce, and sell its products or services, generating value for customers.

Production Function

An economic model expressing the relationship between inputs (like labor, capital) used in production and the output of those production processes.

Differentiation

The process of distinguishing a product or service from others, to make it more attractive to a particular target market.

Product Innovation

The development of new or significantly improved goods or services to meet consumer needs or market demands.