Raja and Suraj were partners sharing Profit and Losses in 3 : 2 with affect from 1st April 2021, they decided to share future profits equally. The goodwill was adjusted at the time of change in profit sharing ratio between partne₹
Answer the following questions:
1) State the need for treatment of goodwill on change in profit sharing ratio.
a. The gaining partner is required to compensate the sacrificing partner.
b. The sacrificing partner is required to compensate the gaining partner.
c. Both a. and b.
d. None of the above
2) Which partner’s capital account is debited at the time of adjusting goodwill through capital accounts?
a. Gaining partner’s capital account
b. Sacrificing partner’s capital account
c. All partner’s capital account
d. None of the above
3) In which ratio is goodwill already existing in the books of account written-off?
a. Sacrificing ratio
b. New ratio
c. Old ratio
d. Gaining ratio
4) Goodwill can be recorded in the books only when
a. It is internally generated
b. It is purchased
c. Both a. and b.
d. None of the above
