Partnership

Admission

Easy

common

At the time of admission, the new partner brings in additional amount in the form of goodwill. For what it is used for ?

To raise the total capital of the firm.

To compensates the sacrificing partner(s).

To distribute the undistributed profits before admission among the old partners.

To compensate all the partners.

✅ Correct Option: 2

The premium for goodwill brought by the incoming partner is compensation for the share of future profits surrendered by the old partners. It is therefore credited to the sacrificing partners in their sacrificing ratio, not to all partners or towards capital.

2025: 27 May Shift 2

When a new partner is admitted, the undistributed profits that appear in the balance sheet of the old firm are transferred to the capital account of:

2026: 19 May Shift 1

P, Q and S are partners in a firm sharing profit and losses in the ratio of 3:2:1. They agreed to admit R as a partner with 1/6th share in profits of the firm. The following Journal entries were passed on his admission. Arrange them in sequence

(A)

Particulars	Dr. Amount	Cr. Amount
P's Capital A/c Dr.	5,400
Q's Capital A/c Dr.	3,600
S's Capital A/c Dr.	1,800
To Goodwill A/c		10,800
(Being existing goodwill ₹ 10,800 written off in old profit sharing ratio)

(B)

Particulars	Dr. Amount	Cr. Amount
Cash A/c Dr.	64,800
To R's Capital A/c		60,000
To Premium for Goodwill A/c		4,800
(Being R brought capital ₹ 60000 and his share of goodwill Rs. 4800)

(C)

Particulars	Dr. Amount	Cr. Amount
P's Capital A/c Dr.	2,400
Q's Capital A/c Dr.	1,600
S's Capital A/c Dr.	800
To Cash A/c		4,800
(Being share of goodwill withdrawn by old partners )

(D)

Particulars	Dr. Amount	Cr. Amount
Premium for Goodwill A/c Dr.	4,800
To P's Capital A/c		2,400
To Q's Capital A/c		1,600
To S's Capital A/c		800
(Being goodwill brought by R distributed in sacrificing ratio)

Find the correct sequence :

2026: 21 May Shift 1

Goodwill, if existing in the books of the firm, is written off at the time of admission of a partner, and is:

2026: 11 May Shift 2

"Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits." Which of the following statements are incorrect in the context of goodwill?

A. It is tangible asset.

B. Goodwill exists only when the firm earns super profits.

C. It is intangible asset.

D. Goodwill tends to be low if the business is centrally located or is at a place having heavy customer traffic,

Choose the correct answer from the options given below:

2026: 19 May Shift 1

Hema and Nema are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Sama on Jan. 1, 2025 as a new partner for 1/4 share in the future profits. Sama brought Rs. 60,000 as his capital. Calculate the value of goodwill of the firm

2025: 30 May Shift 2

The important methods of valuation of goodwill are as follows:

(A) Average Profits Method

(B) Normal Profits Method

(D) Capitalization Method

Choose the correct answer from the options given below:

At the time of admission, the new partner brings in additional amount in the form of goodwill. For what it is used for ?

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)