Goodwill brought in by a new partner in cash is distributed among old partners in: MCQ with Answer and Explanation

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Goodwill brought in by a new partner in cash is distributed among old partners in:

A. Equal ratio

B. Sacrificing ratio

C. Old profit-sharing ratio

D. New profit-sharing ratio

Answer: Option B

Solution (By JKSSB Mock Tests)

The premium for goodwill brought by incoming partner is distributed to old partners in their sacrificing ratio.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

A 'Contra Entry' in the cash book involves:

A. Cash and bank columns only

B. Bank and discount columns

C. Only bank column

D. Cash and discount columns

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Correct Answer: Option A

Explanation:
Contra entries affect both cash and bank columns (e.g., cash deposited, cash withdrawn).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

Goods given away as charity should be credited to:

A. Charity Account

B. Cash Account

C. Purchases Account

D. Sales Account

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Correct Answer: Option C

Explanation:
Donating goods reduces the stock of purchased goods. Thus, the Purchases account is credited at cost price.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

In financial management, the 'Cost of Capital' is:

A. The depreciation cost

B. The total cost of setting up a business

C. The minimum return required by investors

D. The interest paid on loans

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Correct Answer: Option C

Explanation:
The cost of capital is the minimum rate of return that a company must earn on its investments to satisfy its investors and creditors.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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