Nick is admitted to an existing partnership by investing cash. Nick agrees to pay a bonus for his ownership interest because of the past success of the partnership. When Nick's investment in the partnership is recorded
a. a bonus will be credited for the amount of cash he invested.
b. his capital account will be credited for more than the cash he invested.
c. his capital account will be credited for the amount of cash he invested.
d. a bonus will be distributed to the old partners' capital accounts.
An investment is the allocation of money in the anticipation of profit or measurable result in the future. The is result is called a return and it may be negative or positive depending upon the performance of the asset.
Answer and Explanation:
See full answer below.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Corporate Finance: Help & ReviewChapter 2 / Lesson 6