Asked by Femina Asmani on Apr 26, 2024
Verified
A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership
A) will increase
B) will decrease
C) will remain the same
D) may increase, decrease, or remain the same
Capital Account Balance
The amount in a company or partnership's capital account, representing ownership interest in the entity.
Withdraws
Money taken out of a business by its owner(s) for personal use.
Partnership
A business structure where two or more individuals share ownership, as well as the profits or losses of the business.
- Understand the effects of a partner's withdrawal on the remaining partners' capital accounts.
Verified Answer
SR
sahith reddyMay 02, 2024
Final Answer :
C
Explanation :
The capital account balance of the other partners in the partnership will remain the same because the transaction is between the withdrawing partner and the new partner, not involving the existing partners' capital accounts directly.
Learning Objectives
- Understand the effects of a partner's withdrawal on the remaining partners' capital accounts.
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