Multiple Choice
Which of the following types of accounting is primarily concerned with providing information to external users such as investors, creditors, and regulators?
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1. Introduction to Accounting
Types of Accounting
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Which of the following actions will usually dissolve a partnership?
A
Admission of a new partner
B
Retirement of a partner
C
Distribution of profits
D
Revaluation of assets
Verified step by step guidance1
Understand the concept of partnership dissolution: A partnership is dissolved when the legal relationship between the partners changes, leading to the termination of the partnership agreement.
Analyze the options provided: Admission of a new partner, retirement of a partner, distribution of profits, and revaluation of assets.
Evaluate each option: Admission of a new partner typically modifies the partnership agreement but does not dissolve the partnership. Distribution of profits is a routine activity and does not affect the partnership's existence. Revaluation of assets is an accounting adjustment and does not dissolve the partnership.
Focus on the retirement of a partner: When a partner retires, the existing partnership agreement is terminated, and the partnership is dissolved unless the remaining partners agree to continue the business under a new agreement.
Conclude that the retirement of a partner is the action that usually dissolves a partnership, as it fundamentally changes the legal relationship between the partners.
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