Question : When a new partner brings his share of goodwill in cash, the amount is debited to -
Option 1: Capital A/c of the new partner
Option 2: Cash A/c
Option 3: Goodwill A/c
Option 4: Capital A/cs of the old partners
Answer (1)
18th Jan, 2024
Correct Answer: Cash A/c
Solution : Cash/Bank According to the maxim "Debit what comes in," the account is debited when the new partner pays their portion of the goodwill in cash. According to the sacrifice ratio of the previous partners, this quantity of goodwill (premium) is transferred to the capital accounts of the sacrificing partners.
Hence the correct answer is option 2
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