Final answer:
True. When new partners invest more than the equity interest they are to receive in the net assets of an existing partnership, part of the entry to record the new partners' investments is an increase in the capital accounts of the old partners.
Step-by-step explanation:
True. When new partners invest more than the equity interest they are to receive in the net assets of an existing partnership, part of the entry to record the new partners' investments is indeed an increase in the capital accounts of the old partners. This is because the additional investment by the new partners increases the overall capital of the partnership, which is then allocated to the old partners in proportion to their existing capital balances.
For example, if Partner A and Partner B have equal capital balances and a new partner, Partner C, invests an amount greater than the equity interest they are to receive, the excess amount will be added to the capital accounts of Partner A and Partner B. This ensures that the new partner's investment is allocated properly and that the capital accounts reflect the new capital contributions.
Overall, when new partners invest more than their expected equity interest, the increase in their investment is distributed among the existing partners, resulting in an increase in their individual capital accounts.