Marshall Retires from the Partnership of Marshall,Mark,and Dennis

question 141

Multiple Choice

Marshall retires from the partnership of Marshall,Mark,and Dennis.Marshall had a capital balance of $25,000.If Marshall received $25,000 as final settlement,how will this transaction affect the balance sheet items?

• A) Cash will increase.
• B) Liabilities will increase.
• C) Liabilities will decrease.
• D) Equity will decrease.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some of the numbers more than others.

Ordinary Shares

Shares of a company providing ownership rights and potential dividends to holders but usually with voting rights.

Tax Expense

The sum of the current tax and deferred tax charged to an entity's profit or loss for the period.

Preference Dividends

Dividends that are paid to holders of preferred shares, typically at a fixed rate, before any dividends are paid to common shareholders.