Question

When a new partner does not bring his share of goodwill in cash, then the amount is debited to:

• A. Cash A/c
• B. Premium A/c
• C. New Partner’s Capital A/c
• D. Old Partners’ Capital A/c

Hint:

Goodwill not brought in cash → debit New Partner’s Capital A/c; Goodwill brought in cash → debit Cash/Bank A/c.

Answer 1

The Correct Option is C

Step 1: Usual treatment of goodwill.
When goodwill is brought in cash by a new partner, it is credited to the old partners’ capital accounts in their sacrificing ratio.
Step 2: Case of non-payment.
If the new partner does not bring goodwill in cash, then his capital account is debited (reduced), and the sacrificing partners are compensated by crediting their capital accounts.
Step 3: Conclude.
Hence, when goodwill is not brought in cash, it is debited to the New Partner’s Capital A/c.
Final Answer: \[ \boxed{\text{New Partner’s Capital A/c}} \]