Select the Most Appropriate Answer from the Alternatives Given Below : - Book Keeping and Accountancy

MCQ

Select the most appropriate answer from the alternatives given below :

When goodwill is raised at its full value and it is written off __________ account is to be credited.

Options

Cash
goodwill
all Partners capital account
loan

Solution

When goodwill is raised at its full value and it is written off, goodwill account is to be credited.

Explanation: When goodwill is raised in the books of the firm at its full value and it is written off, then Goodwill Account is to be credited and all partners’ Capital Accounts are to be debited in their old profit sharing ratio.

Concept: Retirement Or Death of a Partner - Treatment of Goodwill

Is there an error in this question or solution?

Chapter 4: Reconstitution of Partnership (Retirement of Partnership) - Exercise [Page 127]

Q 3 Q 3 Q 3

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