How to cancel and recreate a new account in Itune?

I want to give my old Iphone 3gs to a friend but before I would like to cancel the account that I used to purchase apps for this Iphone and then how can my friend to creat an account for his own in Itune?

Why would you cancel the iTunes account you used? You aren't going to use your apps anymore, or buy music or anything?
Your friend can just go into iTunes and create his own account.

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