Question

When a new partner does not bring his share of goodwill in cash, the amount is debited to ______.

Options

• Cash A/c

• Premium A/c

• Current A/c of the new partner

• Capital A/cs of the old partners

Answer 1

When a new partner does not bring his share of goodwill in cash, the amount is debited to the Current A/c of the new partner.

Explanation:

This creates a debt in the new partner’s name within the firm’s books. This adjustment ensures that the sacrificing partners are still compensated for giving up their profit share, even without physical cash being brought in at that moment. The new partner’s capital account is typically used if a current account isn’t maintained or specified.