Allan and Ralph are partners.Allan has a capital balance of $89,000 and Ralph has a capital balance of $73,000.Carol invested $61,000 to acquire an ownership interest of $50,000.Which of the following is true of the impact of the transaction on the balance sheet?
A)Assets will increase and equity will decrease.
B)Both assets and equity will increase.
C)Assets will increase and the equity will remain unchanged.
D)Asset increases and the equity will remain unchanged.

Question

Quizplus · Accepted Answer

The transaction increases the assets of the partnership by $61,000 (the amount of Carol's investment) and increases the equity of the partnership by $50,000 (the amount of Carol's ownership interest).

Allan and Ralph Are Partners