190k views
1 vote
What is capital credit in a partnership?

1) The equity of a partner in the new partnership
2) The total agreed capital multiplied by the corresponding percentage interest of the partner
3) The amount of money a partner invests in the partnership
4) The profits earned by the partnership

User Kuffs
by
7.9k points

1 Answer

2 votes

Final answer:

Capital credit in a partnership is the amount of money that a partner invests in the partnership, representing their equity stake. Option 3.

Step-by-step explanation:

Capital credit in a partnership refers to (3) the amount of money a partner invests in the partnership. This investment is the partner's share of the equity in the partnership and can affect the distribution of profits and decision-making power within the firm. Unlike sole proprietorships, where the owner's personal savings may constitute the business's capital, in a partnership, each partner's capital credit signifies their financial stake and potential liability. It's also different from venture capital, which is an external investment in the company, typically in exchange for equity.

User Nsandersen
by
7.9k points

No related questions found