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:

Interstate Commerce Clause

The Interstate Commerce Clause refers to a provision in the U.S. Constitution that grants Congress the power to regulate commerce among the states, playing a crucial role in the expansion of federal regulatory powers.

14th Amendment

An amendment to the US Constitution, ratified in 1868, that granted citizenship to all persons born or naturalized in the United States, including former slaves, and guaranteed all citizens "equal protection of the laws."

Rural Electrification Administration

A U.S. government agency created in 1935 to bring electricity to rural areas that were not served by private utility companies.

Impact

The effect or influence of one object or event on another, often measured to assess outcomes or effectiveness.