Nick is admitted to an existing partnership by investing cash. Nick agrees to pay a bonus for his...

Question:

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.

Investments

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.

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What is an Investment? - Definition & Overview

from Corporate Finance: Help & Review

Chapter 2 / Lesson 6
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