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Hidden Goodwill

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Question

State 'True' or 'False'

If the goodwill account raised up, goodwill account is debited.

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Solution

False

Explanation: If the goodwill account is raised, then goodwill or premium account is credited, whereas, cash/ bank account is debited if the amount is brought in cash.

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If goodwill is written off retiring partner’s capital account is debited.

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When goodwill is written off, goodwill amount is debited.

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