Final answer:
It is false that a new partner's investment over his capital credit results in an increase in the capital accounts of old partners; it is typically treated as a bonus to the existing partners. The subject involves understanding of partnership accounting and the treatment of capital investments within a business context.
Step-by-step explanation:
False, when a new partner invests more than his capital credit, the excess is not recorded as an increase in the capital accounts of the old partners. Instead, the excess is typically treated as a bonus to the existing partners and is allocated to their capital accounts according to a predetermined formula. This recognizes the existing partners for the intangible value or the goodwill of the business that is not reflected in the book values of the assets.
The inflow and outflow of foreign capital discussed in the context of the National Saving and Investment Identity refers to international financial transactions, including investments such as real estate, companies, stocks, and bonds, rather than being limited to government debt. Such capital flows can lead to an increase in the trade deficit as the country obtains the necessary funds to finance its investments. Capital deepening occurs when there's an increase in physical or human capital per person and is generally associated with positive economic developments such as continuing education or a rise in international trade.