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The Admission of a Partner Does Not Change the Composition

question 81

True/False

The admission of a partner does not change the composition of partners' equity if the new partner purchases the old partner's interest by paying the old partner directly.


Definitions:

Retains Earnings

The portion of a company's profits that are kept or withheld from shareholders to reinvest in the business or pay off debt.

Net Worth

The total assets minus total liabilities of an individual or company, indicating financial health.

Shareholders

Individuals or entities that own shares in a corporation, entitling them to a portion of its earnings and assets.

Retained Earnings

The portion of a company's profits that is kept or retained within the company instead of being paid out to shareholders as dividends.

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