When an Existing Partner Sells His Interest to Another Party

question 5

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 always increase by the same amount

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Definitions:

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