Question

If goodwill is not brought in cash by the new partner, it should be debited to his ______ Account.

Options

• current

• capital

• loan

• either current or capital

Answer 1

If goodwill is not brought in cash by the new partner, it should be debited to his either current or capital Account.

Explanation:

If the new partner does not bring cash, the goodwill should be deducted from his capital or current account. Only when one of the partners retires or dies and the surviving partner is unable to pay the debt is the money moved to the loan account.