Question

Select the most appropriate answer from the alternative given below and rewrite the sentence.

When goodwill is withdrawn by old partners ________________ a/c is credited.
a) cash/bank
b) capital
c) revaluation
d) Profit and Loss Adjustment

Answer 1

When goodwill is withdrawn by old partners Cash/Bank A/c is credited.

Explanation: When goodwill is withdrawn by the old partners Cash/Bank A/c is credited. This is because of the rule "Credit what goes out". The amount brought in by the new partner may be withdrawn by the sacrificing partners fully or partly.