Multiple choice

Goodwill bought in by incoming partner in cash for joining in a partnership firm is taken away by the old partners in

  1. Old Profit Sharing Ratio

  2. New Profit Sharing Ratio

  3. Sacrificing Ratio

  4. Capital Ratio
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Goodwill brought in by an incoming partner is distributed to old partners in their sacrificing ratio, not old or new profit sharing ratios. The sacrificing ratio represents the extent to which each old partner has given up their share in favor of the new partner. Capital ratio is irrelevant to goodwill distribution.

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