When a Partner Is Added to a Partnership

question 59

Multiple Choice

When a partner is added to a partnership:

• A)The previous partnership ends.
• B)The underlying business operations ends.
• C)The underlying business operations must close and then reopen.
• D)The partnership must continue.
• E)The partnership equity always increases.

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Definitions:

Operating Activities

Transactions and other events related to the core business functions of an entity, generally involving the production, sales, and delivery of goods and services.

Gain

A financial increase resulting from a transaction that exceeds the cost or value of the item sold or exchanged.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

Operating Activities

Business activities related to the day-to-day functions of producing goods or offering services, impacting the company's cash flow.