When a new partner brings his share of goodwill in cash, the amount is credited to:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Premium for goodwill account
The cash brought for goodwill is first recorded as Bank A/c Dr. To Premium for Goodwill A/c. The premium account is then closed by crediting the sacrificing partners’ capital accounts in their sacrificing ratio.
NCERT (2026-27 edition):
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