True or FalseInstruction: Write "T" if the statement is correct and "F" if incorrect.1. When a new partner is admitted in an existing partnership, automaticallythe previous partnership contract that has been executed by the existingpartners is "dissolved". Partnership Dissolution2. Admission by purchase of interest is a personal transaction between theselling partner and buying partner.3.In an admission by "purchase of interest" the only concern of thepartnership is the transfer of interest from the selling partner to thebuying partner only.4. One of the characteristics of admission by investment is that both assetsand capitalization of the partnership will increase.Bonus has the effect of decreasing the capital balance of the partnergiving the bonus and increasing the capital balance of the partnerreceiving the bonus.5.6. Total agreed capital refers to the amount of new capital set by thepartners.7. Total contributed capital refers to the combined capital of both new andold partners.8. Under bonus method, the capital of the new partner is computed bymultiplying the contributed capital of both new and old partners by theinterest acquired by the new partner.9. If the capital credit of the new partner is equal to his contribution, nobonus will be given to both the new and old partners.

1) True, when a new partner is admitted then the old partnership deed is automatically and a new…

Instruction: Write "T" if the statement is correct and "F" if incorrect. 1. When a new partner is admitted in an existing partnership, automatically the previous partnership contract that has been executed by the existing partners is "dissolved".

Instruction: Write "T" if the statement is correct and "F" if incorrect. 1. When a new partner is admitted in an existing partnership, automatically the previous partnership contract that has been executed by the existing partners is "dissolved".

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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Concept explainers

Partnership Accounting

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

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.

Question

True or False
Instruction: Write "T" if the statement is correct and "F" if incorrect.
1. When a new partner is admitted in an existing partnership, automatically
the previous partnership contract that has been executed by the existing
partners is "dissolved".

Partnership Dissolution
2. Admission by purchase of interest is a personal transaction between the
selling partner and buying partner.
3.
In an admission by "purchase of interest" the only concern of the
partnership is the transfer of interest from the selling partner to the
buying partner only.
4. One of the characteristics of admission by investment is that both assets
and capitalization of the partnership will increase.
Bonus has the effect of decreasing the capital balance of the partner
giving the bonus and increasing the capital balance of the partner
receiving the bonus.
5.
6. Total agreed capital refers to the amount of new capital set by the
partners.
7. Total contributed capital refers to the combined capital of both new and
old partners.
8. Under bonus method, the capital of the new partner is computed by
multiplying the contributed capital of both new and old partners by the
interest acquired by the new partner.
9. If the capital credit of the new partner is equal to his contribution, no
bonus will be given to both the new and old partners.

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