What is the effect of a partner's admission on the existing partners' capital accounts?

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Q: What is the effect of a partner's admission on the existing partners' capital accounts?

Solution: The effect on existing partners' capital accounts depends on the partnership agreement regarding the admission of a new partner.

Steps: 6

Step 1: Understand that a partnership has existing partners with capital accounts that show their investment in the business.
Step 2: Know that when a new partner is admitted, it can affect the existing partners' capital accounts.
Step 3: Check the partnership agreement to see how it handles the admission of new partners.
Step 4: If the agreement states that existing partners will share the new partner's investment, their capital accounts may be adjusted.
Step 5: If the new partner buys in for a specific amount, the existing partners' capital accounts may be increased or decreased based on the agreement.
Step 6: Finally, remember that the specific effect on capital accounts can vary based on the terms agreed upon by all partners.