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) cannot be invested in the new partnership.
D) may be adjusted to reflect current values before being transferred to the partnership.

Question

Quizplus · Accepted Answer

When the owner of a sole proprietorship accepts a partner, the assets of the proprietorship may be adjusted to reflect current values before being transferred to the partnership. This allows for a fair and accurate evaluation of the assets and ensures that the new partner is investing in the partnership at an appropriate value. Option A is incorrect because the transfer of assets should reflect current values, not the values reflected in the financial records of the proprietorship. Option B is incorrect because the assets do not necessarily need to be converted to cash to pay debts and excess cash is not always available for investment in the new partnership. Option C is incorrect because the assets may be invested in the new partnership.

When the Owner of a Sole Proprietorship Accepts a Partner,the