When a new partner is admitted to a partnership by purchasing an existing partner's interest,the business's accounting records do not record the transfer of cash from the new partner to the existing partner.

Question

Quizplus · Accepted Answer

When a new partner is admitted to a partnership by purchasing an existing partner's interest, the transaction is recorded in the partnership accounting records by adjusting the partners' capital accounts, rather than by recording a transfer of cash. The existing partner who is selling his or her interest will receive cash from the new partner, but this is not recorded as a separate transaction.

When a New Partner Is Admitted to a Partnership by Purchasing