A bonus may be paid in all of the following situations except:
A)By a new partner when the current value of a partnership is greater than the recorded amounts of equity.
B)By a withdrawing partner to remaining partners if the recorded value of the equity is overstated.
C)To a new partner with exceptional talents.
D)By remaining partners to a withdrawing partner if the recorded equity is understated.
E)By an existing partner to him or herself when in need of personal cash flow.

Question

Quizplus · Accepted Answer

A bonus may be paid for reasons such as exceptional performance or to incentivize a new partner to join the partnership, but it should not be paid out to an existing partner solely for personal cash flow needs. The other options listed involve adjustments to the recorded equity of the partnership, which may require a bonus payment.

A Bonus May Be Paid in All of the Following