Question : At the time of reconstitution of the firm by way of change in profit sharing ratio/ admission of a partner/retirement of a partner/death of a partner, Gaining partners compensates the sacrificing partner by paying a proportionate amount of
Option 1: Goodwill
Option 2: Capital
Option 3: Both 1 and 2
Option 4: Either 1 and 2
Correct Answer: Goodwill
Solution : Answer = Goodwill
During the reconstitution of a firm, such as changes in profit-sharing ratios or admission/retirement/death of partners, the gaining partners compensate the sacrificing partner by paying a proportionate amount of goodwill. This payment helps maintain equity among partners and ensures a fair distribution of assets and liabilities. Hence, the correct option is 1.
Question :
Which of the following statement is correct?
Option 1:
Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in sacrificing ratio.
Option 2:
Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in gaining ratio.
Option 3: Goodwill at the time of retirement of a partner is debited to remaining Partners' Capital Accounts in sacrificing ratio.
Option 4:
Goodwill at the time of retirement of a partner to the extent of retiring Partner's Share is debited to remaining Partners’ Capital Accounts in gaining ratio.
Question : Which of the statements is true?
Option 1: The deceased partner is entitled to his share of goodwill because goodwill was earned by The firm when he was a partner.
Option 2: In the case of Retirement of a Partner, Gaining Partners Compensate the deceased partner by paying goodwill in their gaining ratio.
Option 3: Deceased Partner s Share of Goodwill = Value of Firm's Goodwill × Profit Share of Deceased Partner
Option 4: All of the above
Question : Sacrificing ratio is calculated because:
Option 1: Revaluation Account profit can be credited to sacrificing partners
Option 2: Goodwill brought in by the incoming partner can be credited to the new partner
Option 3: Goodwill brought in by the incoming partner can be credited to the sacrificing partners
Option 4: Both (1) and (3)
Question : When goodwill existing in the books is written off at the time of admission of a partner it is transferred to Partners' Capital Accounts in their
Option 1: Old profit-sharing ratio
Option 2: New profit-sharing ratio
Option 3: Sacrificing ratio
Option 4: Gaining ratio
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