Which of the following statements is correct?
A)The general ledger of a partnership will include a single capital account, whose balance represents the combined equity of all the partners.
B)Past-due accounts receivable should not be transferred from the financial records of a sole proprietorship to a newly formed partnership.
C)The financial records of a new partnership are opened with a memorandum entry in the general journal.
D)A new partner must purchase the partnership interest of another partner.

Question

Quizplus · Accepted Answer

When a new partnership is formed, the financial records are opened with a memorandum entry in the general journal to record contributions made by each partner, as well as any initial liabilities or assets taken over by the partnership. Therefore, statement C is correct.

Statement A is incorrect because the general ledger will include separate capital accounts for each partner, reflecting their individual equity in the partnership.

Statement B is incorrect because past-due accounts receivable should be included in the financial records of the partnership since they represent assets and potential cash inflows of the business.

Statement D is incorrect because a new partner can join a partnership by investing directly in the partnership or by purchasing a portion of another partner's interest, but it is not required.

Which of the Following Statements Is Correct