A bonus is paid to the old partners when:

Question

Quizplus · Accepted Answer

A bonus is paid to the old partners when the equity of a partnership is worth more than what is recorded in the accounting records. This typically occurs when the business has experienced significant growth or increased profitability since the original partnership agreement was formed. The bonus represents a distribution of this additional value to the old partners, in proportion to their ownership interest in the partnership. Choices A and C do not accurately describe the circumstances under which a bonus would be paid to old partners, and choice D is incorrect because there is a correct answer.

A Bonus Is Paid to the Old Partners When