When a partner sells his capital interest to a new partner, the following take place exceptit is considered as a personal transaction between the selling partner and the buyer who becomes anew partner.O Purchase price paid by the new partner is not recorded in the booksO payment of incoming partner is given to the partnershipO It involves a transfer of capital of the selling partner to the capital of the buying partner

Partnership: Partnership is a form of business organization in which two or more two individuals…

When a partner sells his capital interest to a new partner, the following take place except it is considered as a personal transaction between the selling partner and the buyer who becomes a new partner. Purchase price paid by the new partner is not recorded in the books payment of incoming partner is given to the partnership O It involves a transfer of capital of the selling partner to the capital of the buying partner

When a partner sells his capital interest to a new partner, the following take place except it is considered as a personal transaction between the selling partner and the buyer who becomes a new partner. Purchase price paid by the new partner is not recorded in the books payment of incoming partner is given to the partnership O It involves a transfer of capital of the selling partner to the capital of the buying partner

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

When a partner withdraws from a partnership, why is the final distribution often based on the appraised value of the business rather than on the book value of the capital account balance?
An incoming partner may acquire an interest in the partnership for a price in excess of that indicated by the book value of the original partnership’s net assets. This situation would suggest the existence of: a. Unrecognized Goodwill b. Recognized Profit c. Unrecognized capital d. Unrecognized excess of cash
If there is no written, legal agreement for the partnership then which one of the following will apply: a. Partners are entitled to salary b. Interest on capital is not allowed c. Partners are entitled to bonus d. Interest will be charged on drawings
A partnership agreement may NOT include O the method of allocating profits and losses the purpose of the business each partner's duties O the name of the heirs of each of the partners who will inherit the share in the partnership business
What is the answer on questions 1 and 2?
The partner's drawing account is used: O To reduce the partner's capital account balances at the end of an accounting period O To record the partner's share of net income or loss for an accounting period O In the same manner as the partner's loan accounts O To record the partner's salaries.
How do loans from partners affect the distribution of assets in a partnership liquidation?
In the liquidating process, any uncollectible deficiency becomes a loss to the partnership and is divided among the remaining partners' capital balances based on their income-sharing ratio. True /false
One of the final steps in terminating a partnership is the distribution of remaining assets to the partners after all obligations have been met. What is the basis for distributing any remaining assets/cash among the partners? How would loans from partners affect the distribution of partnership assets?
In the liquidating process, any uncollected cash becomes a loss to the partnership and is divided among the remaining partners' capital balances based on their income-sharing ratio. Group of answer choices True False
Under the goodwill method, a. declines in asset values prior to new partner admission are recorded, but not asset appreciation. b. the total capital of the new partnership must approximate the fair value of the entity. c. a new partner’s capital balance may be less than his or her contribution. d. All of the above.
Which statement is FALSE when describing the withdrawal of a partner? O It can be paid for from partners' personal assets. O It can be paid for from partnership assets. O Paying with partnership assets affects only the remaining partners' capital accounts. O Paying with partners personal assets affects only the remaining partners' capital accounts.