Partnership

Admission

Easy

common

At the time of admission, new partner brings his share of goodwill which is distributed among old partners. This treatment is conceptually used to:

Raise the total capital of the firm.

Ensure that gaining partner compensates the sacrificing partner(s).

Distribute the undistributed profits before admission among the old partners.

Ensure that a new partner gets the benefit at the time of admission.

✅ Correct Option: 2

The incoming partner acquires a share of future profits that the old partners give up. Premium for goodwill is therefore compensation paid by the gaining partner to the sacrificing partners, credited to them in the sacrificing ratio. It is not a device to raise capital or to distribute past reserves.

2025: 3 June Shift 2

Das and Sinha are partners in a firm sharing profits in 4:1 ratio. They admitted Pal as a new partner for 1/4 share in the profits, which he acquired wholly from Das. Determine the new profit sharing ratio among Das, Sinha and Pal.

2025: 27 May Shift 2

Identify the steps involved in calculating goodwill under the capitalization of super profits method:

(A) Calculate capital of the firm, which is equal to total assets (excluding goodwill and fictitious assets) minus outside liabilities

(B) Multiply the super profits by the required rate of return multiplier

(D) Calculate super profits by deducting normal profits from average profits

(E) Calculate average profit for past years

Choose the correct answer from the options given below:

2026: 29 May Shift 2

Arrange the following steps in the correct accounting sequence when hidden goodwill is adjusted through capital accounts:

A. Calculate the actual total capital of all the partners including the new partner.

B. Calculate the firm's total capital on the basis of new partners share

C. Determine the difference between the two capitals.

D. Determine new profit sharing ratio

Choose the correct answer from the options given below:

2026: 13 May Shift 2

Kishor and Kunal were partners sharing profits and losses in the ratio of 5:3. On 1st April, 2026 they admitted Kushagra as a new partner and new ratio was decided as 3:2:1. Goodwill of the firm was valued as ₹ 18,00,000. Kushagra couldn't bring any amount for goodwill. The journal entry for the same would be:

2026: 21 May Shift 1

Match List-I with List-II

List-I	List-II
(A) In this method, the person who purchases a running business must pay in the form of goodwill, a sum which is equal to the profits he is likely to receive for the first few years.	(I) Capitalised value of business
(B) It is desirable to value goodwill on the basis of the excess profits and not the actual profits.	(II) Goodwill
(C) Average Profits × 100/Normal Rate of Return	(III) Super Profit Method
(D) Capitalised value – Net Assets	(IV) Average profit Method

Choose the correct answer from the options given below:

2025: 22 May Shift 2

Arrange the steps in proper sequence to calculate Goodwill through Super profits Method.

(A) Calculate the normal profit on the firm's capital on the basis of the normal rate of return.

(B ) Calculate the average profit.

(D) Multiply super profits by the given number of years purchased.

Choose the correct answer from the options given below:

At the time of admission, new partner brings his share of goodwill which is distributed among old partners. This treatment is conceptually used to:

Solution

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