When a Partner Sells His Interest to Another Party,the Journal

question 39

True/False

When a partner sells his interest to another party,the journal entry simply credits the withdrawing partner's capital account and debits the new partner's capital.

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Definitions:

Accounting Equation

The foundational equation in accounting represented as Assets = Liabilities + Equity, illustrating the structure of a balance sheet.

Net Income

The total revenue of a company minus its expenses, taxes, and costs, representing the company's profit.

Adjustment

A financial transaction that corrects or updates the accounting records, often made at the end of an accounting period to ensure accuracy.

Prepaid Rent

An accounting term that refers to rent payments made in advance of the rental period to which it relates, classified as a current asset on the balance sheet.