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Kayode, Akpan and Kachalla are in partnership. Their respective capital accounts had the following balances:...

Accounts - Principles of Accounts
JAMB 1994

Kayode, Akpan and Kachalla are in partnership. Their respective capital accounts had the following balances: N40,000, N50,000 and N70,000.
The partners agree to admit Wamo as a new partner with a one-fifth interest in the partnership capital in exchange for N50,000 cash. Wamo's equity in the resulting partnership is

  • A. N32,000
  • B. N40,000
  • C. N42,000
  • D. N50,000
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Correct Answer: Option D
Explanation

Equity is the same as capital. This is funds paid into a business by investors in exchange for common or preferred stock.

50,000 is Wamo's equity contribution.

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WAEC offline past questions - with all answers and explanations in one app - Download for free
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC offline past questions - with all answers and explanations in one app - Download for free