Question

when the incoming partners brings his share of goodwill in cash, it is adjusted by crediting to.........
(1) His capital account
(2) old partners capital
(3) goodwill account
(4) None of these​

Answer 1

Explanation:

Premium for goodwill is the extra amount brought in by the incoming partner to compensate the old partners for their loss in the share of super profits of the firm. This extra amount is distributed among the old partners in their sacrificing ratios by crediting their capital accounts.

The accounting entry is:

Premium for goodwill a/c..... Dr

To Old partner's Capital a/c

Answer 2

Answer:

The premium for goodwill is the extra amount brought in by the incoming partner to compensate the old partners for their loss in the share of super-profits of the firm. This extra amount is distributed among the old partners in their sacrificing ratios by crediting their capital accounts.