Dominic and Morgan Are Partners

question 119

Multiple Choice

Dominic and Morgan are partners.Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000.Morgan sells $125,000 of his ownership to Lance.Which of the following is TRUE of the items in the balance sheet?

• A) The total equity decreases by $125,000.
• B) The total equity remains unchanged.
• C) Assets will decrease by $125,000.
• D) Assets will increase by $125,000.

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Definitions:

Borrowed

Something obtained or received temporarily with the intention of returning it or its equivalent value.

Interest

The expense associated with lending money or the profit from an investment, usually shown as a percentage.

Days

A unit of time equivalent to 24 hours, generally used to measure durations and intervals.

Investment

The allocation of resources, usually money, in expectation of generating income or profit.