When a new partner is admitted and pays an amount for goodwill, the existing partners' goodwill account is credited in
Answer and explanation
Correct answer: C. their old profit-sharing ratio
- Step 1: Goodwill built up before the new partner arrived belongs to the old partners in their old ratio. Answer: their old profit-sharing ratio. Why not the others: equal shares always: The old ratio decides how the goodwill is shared. the new profit-sharing ratio: The new partner did not earn the old goodwill. the ratio of capitals: Capital ratios are not used unless agreed.
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More Partnership accounts questions
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