QUESTION 1

1. If an existing partner sells their share in a partnership to a new partner in a personal deal (with the agreement of the remaining partners) then the amount of cash paid to the former partner by the new partner is?

   Debited to the new partner

   Credited to the former partner

   Irrelevant to the partnership

   Increases the partnership assets by the difference between the cash paid and the former partners Capital account balance.

   QUESTION 2

   If two sole proprietors come together to form a partnership, with each contributing assets and liabilities from their previous business, these are brought into the partnership at:

   		value as recorded in their original businesses books.
   		current market value.
   		discounted cash flow value.
   		independent valuation of non cash assets and libailities.