Question : If the new partner brings the goodwill amount in cash and the goodwill account still has a balance, the goodwill account is wiped down among the previous partners in -
Option 1: The sacrificing ratio
Option 2: The old profit sharing ratio
Option 3: The new profit sharing ratio
Option 4: The gaining ratio
Correct Answer: The old profit sharing ratio
Solution : To make up for the loss of the partners' respective profits shares, a new partner may bring in his share of the goodwill premium. The partners share this premium according to their willingness to sacrifice. If, however, goodwill is already recorded in the books, it is divided among the partners according to their previous profit-sharing arrangements.
The accounting entry for the distribution of existing goodwill: Partners' Capital A/c... Dr. Dr. To Goodwill A/c
Hence the correct answer is option 2.
Question : If the new partner brings his share of goodwill in cash, it will be shared by old partners in -
Option 1: Old profit sharing ratio
Option 2: New profit sharing ratio
Option 3: Ratio of sacrifice
Option 4: In Capital ratio
Question : At the time of admission of a partner, the balance of the Investments Fluctuation Reserve, after meeting the loss on revaluation of investments is transferred to _____________of __________in their_____________.
Option 1: All partners capital account and in their new profit sharing ratio
Option 2: Old partners capital account and in their sacrificing ratio
Option 3: Old partners capital account and in their old profit sharing ratio
Option 4: Only sacrificing partners capital account and their sacrificing ratio
Question : In the event of change in profit-sharing ratio, profit and loss (credit balance) existing in the Balance Sheet is transferred to Capital Accounts of partners in their
Option 1: Sacrificing ratio
Option 2: Gaining ratio
Option 3: Old profit-sharing ratio
Option 4: New profit-sharing ratio
Question : In the event of change in profit-sharing ratio, profit and loss (Dr) existing in the Balance Sheet is transferred to Capital Accounts of partners in their
Option 2: gaining ratio
Option 3: old profit-sharing ratio
Option 4: new profit-sharing ratio
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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