Practicing Success
Answer based on following information Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2 : 1 Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance sheet of Azad and Babli as on December 31, 2016 (before Chintan's admission) was as follows:
(i) Chintan will bring in ₹12,000 as his share of goodwill premium. (ii) Buildings were valued at ₹45,000, and Machinery at ₹23,000. (iii) A provision for doubtful debts is to be created at 6% on debtors. (iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts. |
Which of the following is not a factor affecting value of goodwill? |
Efficiency of management Location of business Number of partners Nature of business |
Number of partners |
The correct answer is Option (3) → Number of partners The number of partners is not typically considered a factor affecting the value of goodwill. Goodwill is usually influenced by factors like the efficiency of management, location of the business, and the nature of the business itself. The number of partners may not directly impact the perceived value of goodwill in the same way as these other factors. |