Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

When a partner is added to a partnership, which of the following typically occurs?

The new partner is not liable for any of the partnership's existing obligations.

The new partner contributes assets and receives an ownership interest in the partnership.

The partnership is automatically dissolved and must be reformed.

Existing partners are required to sell all of their interests to the new partner.

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Verified step by step guidance

Understand the concept of partnership: A partnership is a business structure where two or more individuals share ownership, profits, and liabilities. Adding a new partner involves changes to the partnership agreement.

Review the legal implications: When a new partner joins, they typically contribute assets (cash, property, or other resources) to the partnership and receive an ownership interest. However, the new partner becomes liable for the partnership's obligations moving forward, but not retroactively for existing obligations unless agreed otherwise.

Analyze the dissolution aspect: Adding a new partner does not automatically dissolve the partnership. Instead, the partnership agreement is amended to include the new partner's terms and contributions.

Clarify the ownership transfer: Existing partners are not required to sell all their interests to the new partner. Instead, the new partner's ownership interest is determined based on their contribution and the agreed terms in the partnership agreement.

Summarize the correct answer: The correct answer is that the new partner contributes assets and receives an ownership interest in the partnership. This process involves amending the partnership agreement and does not require dissolution or complete transfer of ownership from existing partners.