Partnerships (Formation) Part 2

Question 1

When the owner of a sole proprietorship accepts a partner, the assets of the proprietorship:

A. Must be transferred to the partnership at the values reflected in the financial records of the proprietorship

B. Must be converted to cash and used to pay any debts of the proprietorship, with excess cash available for investment in the new partnership

C. May be adjusted to reflect current values before being transferred to the partnership

D. Cannot be invested in the new partnership

Answer 1

C. May be adjusted to reflect current values before being transferred to the partnership