Question

State whether the following statements are true or false :

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

Answer 1

True

Explanation: The old goodwill already existing in the books of a firm (as reflected in the Old Balance Sheet prior to retirement) is written off by debiting All Partners’ Capital Accounts (including retiring partner) in their old profit sharing ratio and by crediting the Goodwill A/c.