On admission of a partner, the amount of goodwill brought in cash is credited to Goodwill Account.

Question

State True or False with reasons.

On admission of a partner, the amount of goodwill brought in cash is credited to Goodwill Account.

Answer 1

This statement is True.

When newly admitted partner brought cash for goodwill, Cash/Bank Account is debited as it comes in and Goodwill Account is credited and afterward, Goodwill Account will be debited when benefits of Goodwill are transferred to old partners’ Capital Accounts.