If a Is the Total Capital of a Partnership Before

question 17

Multiple Choice

If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the admission of the new partner, C is the amount of the new partner's investment, and D is the amount of capital credited to the new partner, then there is:

• A) goodwill to the new partner if B > (A + C) and D < C.
• B) goodwill to the old partners if B = A + C and D > C.
• C) a bonus to the new partner if B = A + C and D > C.
• D) neither bonus nor goodwill if B > (A + C) and D > C.

---

Definitions:

Statement Of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Direct Method

A way of reporting cash flows from operating activities in a cash flow statement that lists specific types of cash receipts and payments.

Cash Inflow

Money coming into a business or project from various sources including sales, investment income, or financing.

Cash Outflow

Money that flows out of a business or a financial account, typically representing expenses or investments.