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:

Capital Budget

A budget for investments in major physical assets, such as buildings and machinery, expected to provide benefits in the future.

Maintenance Supplies

Items and materials used in the routine care, repair, and upkeep of machinery, buildings, and equipment to ensure operational efficiency and safety.

Supply Planning Process

The proactive method of coordinating assets to optimize the supply of products and services.

Sales Forecast

The process of estimating future sales, based on historical data, industry comparisons, and market analysis, to guide business planning.