Which of the Following Statements Describes the Situation in Which

question 47

Multiple Choice

Which of the following statements describes the situation in which a new person pays a bonus to buy into a partnership?

• A)The new person pays a greater amount into the partnership than his or her proportionate share of the total capital.
• B)The new partner pays in to the partnership an amount that is less than his or her proportionate share of the total capital.
• C)The new person pays certain amounts directly to the existing partners in addition to his or her payment to the partnership.
• D)The new partner pays in an amount equal to the average capital balances of the existing partners.

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Definitions:

Liquidating Partnership

The process of dissolving a partnership by selling off assets, paying liabilities, and distributing the remaining assets to the partners.

Final Settlement

The concluding financial transaction that resolves all outstanding obligations of a contract.

Profit and Loss Sharing

An agreement between business partners to distribute the profits and losses of a business in proportion to their ownership stakes or agreed-upon percentages.

Liquidation Expenses

Liquidation expenses are the costs associated with selling or disposing of a company's assets during the cessation of operations, often part of winding down a business.