In a partnership business, Jack has an ownership of 60% and Teresa has an ownership of 40%. For growing the business, Jack contributed $7,000 and Teresa contributed $3,000 on July 1. Which of the following is true of this scenario?AOnly the total contribution of $10,000 will be recordedBIndividual contribution of $7,000 by Jack and $3,000 by Teresa will be recordedCEither the total contribution of $10,000 or the contribution in the ownership ratio will be recordedD60% of Jack's contribution and 40% of Teresa's contribution will be recorded

Capital invested by partners would increase the capital of the respective partners.

Answered: In a partnership business, Jack has an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In a partnership business, Jack has an ownership of 60% and Teresa has an ownership of 40%. For growing the business, Jack contributed $7,000 and Teresa contributed $3,000 on July 1. Which of the following is true of this scenario?

A	Only the total contribution of $10,000 will be recorded
B	Individual contribution of $7,000 by Jack and $3,000 by Teresa will be recorded
C	Either the total contribution of $10,000 or the contribution in the ownership ratio will be recorded
D	60% of Jack's contribution and 40% of Teresa's contribution will be recorded

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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