Accountancy Part AAdmission of a Partner

Arrange in correct sequence at a time of admission of partner- (A) Ad…

Arrange in correct sequence at a time of admission of partner-

(A) Adjustments of capital accounts.

(B) Valuation of goodwill

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (B), (A)

On admission, each adjustment needs the one before it:

(C) New profit sharing ratio and sacrificing ratio — these come first, because the new partner’s share and the old partners’ sacrifice must be known before anything is shared.
(B) Valuation of goodwill — goodwill is then valued and the new partner’s premium is shared by the old partners in the sacrificing ratio.
(A) Adjustment of capital accounts — the capitals are adjusted last, after goodwill, revaluation and reserves have reached the capital accounts.

NCERT (2026-27 edition):
Admission of a New Partner – “… Following are the other important points which require attention at the time of admission of a new partner: 1. New profit sharing ratio; 2. Sacrificing ratio; 3. Valuation and adjustment of goodwill; 4. Revaluation of assets and Reassessment of liabilities; 5. Distribution of accumulated profits (reserves); and 6. Adjustment of partners’ capitals.”