S1: In a partnership, if a new partner is admitted and brings his share of goodwill in cash, the goodwill account is credited. S2: If the goodwill account already exists in the books, it is written off among the old partners in their old profit-sharing ratio before admission. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: In a partnership, if a new partner is admitted and brings his share of goodwill in cash, the goodwill account is credited. S2: If the goodwill account already exists in the books, it is written off among the old partners in their old profit-sharing ratio before admission. Which statement(s) is/are correct?
A. S1 only
B. Neither S1 nor S2
C. S2 only
D. Both S1 and S2
Answer: Option C
Solution (By JKSSB Mock Tests)
S1 is incorrect because AS 26 prohibits opening a goodwill account; the cash brought is credited to the old partners' capital accounts in their sacrificing ratio. S2 is correct; existing goodwill is written off in the old ratio before the new partner's admission.
S1: Bank Reconciliation Statement is prepared by the bank. S2: Bank Reconciliation Statement is prepared on a specific date. Which statement(s) is/are correct?
Explanation:
BRS is prepared by the account holder (the customer), not the bank. It is prepared for a specific date to reconcile the balances as per the Cash Book and the Pass Book on that day. S1 is incorrect, S2 is correct.
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