Answered: When the investment of a new partner…

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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Question

When the investment of a new partner into the partnership exceeds his/her initial capital credit, there is:

Group of answer choices

Bonus from the new partner to the old partners

Cannot be determined based on the given

Partnership revaluation

Bonus from the old partners to the new partner

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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