Question

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

Answer 1

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.