Question

On admission of a partner, the amount of goodwill brought in cash is credited to goodwill account. (State True or False)

Answer 1

This statement is True.

Answer 2

Answer:

This statement is True.

Explanation:

When a business is set up in the Partnership form of business, there can be two or more partners of the business. These partners give their input into the business in the form of Capital or Skills or both. There is always room for more partners in the hour of need. When new partners are added into the Partnership company, the aim is to do better in the business and take business to the heights of success. Introduction of new partners bring capital, skills as well as the goodwill for the business. This goodwill that came in the capital or cash for the company is credited to the goodwill account of the company.