This MCQ Test on the treatment of goodwill on admission of a new partner has 15 practice questions. it covers all the cases of goodwill treatment. When new partner brings his share of goodwill, when he brings his goodwill share partially and when new partner does not bring his share of goodwill. It also covers hidden goodwill concepts and when goodwill is brought in kind by the new partnerThe test covers conceptual questions for all above aspects. This MCQ test suits well for conceptual clarity for your board exams
CBSE class 12 accountancy MCQ questions
The below MCQ test is designed as per the latest syllabus prescribed by CBSE board. With the rise in weightage of MCQ questions, the practice of MCQ questions becomes very important. The quiz is equally useful for students of CUET exams.
How to attempt the quiz
One by one go through the below questions and select the right option. Do all the questions and in the end press submit. Instantly you will get your score and the explanation against each question. Go through your mistakes and reattempt the quiz any number of times as needed.
MCQ Quiz - Practice Questions
MCQ Quiz
Question 1
Premium for Goodwill Account is of the nature of:
A
Correct Answer: Liability Account
Premium for Goodwill Account is a liabiloty Account representing amount payable by firm to sacrificing partners, hence credited when received.
Question 2
When new partner brings goodwill but old partners withdraw it partially, entry for withdrawal is:
B
Correct Answer: Debit Partner Capital A/c, Credit Bank for withdrawn amount
Partial withdrawal: Debit Capital Accounts of withdrawing partners and Credit Bank for the amount withdrawn.
Question 3
If sacrificing ratio is calculated from goodwill amounts credited to partners, we:
B
Correct Answer: Find ratio of goodwill amounts credited to partners capital A/c
Goodwill is distributed in sacrificing ratio. The ratio of goodwill amounts credited reveals the sacrificing ratio.
Question 4
New partner's share of goodwill is calculated as:
A
Correct Answer: Total firm goodwill × New partner's share
New partner's goodwill share = Firm's total goodwill value × New partner's profit share.
Question 5
When capitals are fixed, goodwill adjustment is done through:
B
Correct Answer: Partner Current Accounts
When capitals are fixed, all adjustments including goodwill are made through Partners Current Accounts, not Capital Accounts.
Question 6
Goodwill brought in kind by new partner is recorded by debiting:
B
Correct Answer: Asset Account (specific asset)
When goodwill brought in kind, specific Asset Account (like Machinery, Stock) is debited and Premium for Goodwill credited.
Question 7
Treatment of hidden goodwill when new partner cannot bring it in cash:
A
Correct Answer: Debit his Current Account, Credit sacrificing partners
Hidden goodwill not brought in cash: Debit new partner's Current Account, Credit sacrificing partners in sacrificing ratio.
Question 8
If existing goodwill is Rs. 1,00,000 and valued at Rs. 2,50,000 on admission, new partner brings goodwill on:
B
Correct Answer: Rs. 2,50,000
New partner brings goodwill based on current valuation (Rs. 2,50,000), not on existing book value. His share calculated on Rs. 2,50,000.
Question 9
When new partner brings goodwill through cheque, it is recorded as:
B
Correct Answer: Debit Bank Account
Cheque is deposited in bank, so Bank Account is debited (not Cash) and Premium for Goodwill Account is credited.
Question 10
Premium for Goodwill is compensation to sacrificing partners for:
B
Correct Answer: Sacrifice of profit share
Premium for goodwill compensates sacrificing partners for giving up their profit share to the new partner.
Question 11
When two partners are admitted at the same time, then :
B
Correct Answer: Both bring their respective goodwill share
When multiple partners admitted, calculate each one's goodwill share based on their profit share and adjust as per sacrifice/gain of each old partner.
Question 12
Goodwill appearing in Balance Sheet before admission should be:
B
Correct Answer: Written off in old ratio before admission adjustments
Existing goodwill (purchased) should be written off by debiting old partners in old ratio before making admission adjustments.
Question 13
If fixed capital method is followed , gaining partner pays compensation to sacrificing partner, the entry is:
A
Correct Answer: Debit Gaining partner Capital, Credit Sacrificing partner Capital
