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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.
Reason (R): The adjustment will reduce the capital of the partner.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false .
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'D'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A)...
If goodwill is not brought in cash, it can be adjusted through the new partner’s capital account or current account as the case may be.
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Directions : In the following questions, a statement of Assertion (A)...
Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.
Reason (R): The adjustment will reduce the capital of the partner.
The correct answer is option (D) Assertion (A) is false, but Reason (R) is true.
Explanation:
To understand this assertion and reason, let's first understand the concept of goodwill and its treatment in partnership accounting.
Goodwill is the value of a business that exceeds its net assets. It represents the reputation, customer base, brand value, and other intangible factors that contribute to the business's profitability. When a new partner is admitted into an existing partnership, the existing partners may agree to share their goodwill with the new partner.
The treatment of goodwill depends on whether it is brought in cash or not. If goodwill is brought in cash, it is distributed among the existing partners in their profit-sharing ratio. In this case, the new partner does not contribute any additional capital, but acquires a share in the existing goodwill by paying cash.
However, if goodwill is not brought in cash, it is recorded in the books of the partnership as an intangible asset. The existing partners agree to adjust the value of goodwill in the new partner's capital account. The new partner's capital account is debited with the value of goodwill, and the existing partners' capital accounts are credited in their profit-sharing ratio. This adjustment does not affect the total capital of the partnership.
Now, let's analyze the assertion and reason provided:
Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.
This assertion is false. Goodwill can also be adjusted through the existing partners' capital accounts in their profit-sharing ratio. The adjustment is not limited to the new partner's capital account.
Reason (R): The adjustment will reduce the capital of the partner.
This reason is true. When the adjustment for goodwill is made, the new partner's capital account is debited with the value of goodwill. This will reduce the new partner's capital. However, it does not affect the total capital of the partnership as the existing partners' capital accounts are credited in their profit-sharing ratio.
Therefore, the correct answer is option (D) Assertion (A) is false, but Reason (R) is true.
Reason (R): The adjustment will reduce the capital of the partner.
The correct answer is option (D) Assertion (A) is false, but Reason (R) is true.
Explanation:
To understand this assertion and reason, let's first understand the concept of goodwill and its treatment in partnership accounting.
Goodwill is the value of a business that exceeds its net assets. It represents the reputation, customer base, brand value, and other intangible factors that contribute to the business's profitability. When a new partner is admitted into an existing partnership, the existing partners may agree to share their goodwill with the new partner.
The treatment of goodwill depends on whether it is brought in cash or not. If goodwill is brought in cash, it is distributed among the existing partners in their profit-sharing ratio. In this case, the new partner does not contribute any additional capital, but acquires a share in the existing goodwill by paying cash.
However, if goodwill is not brought in cash, it is recorded in the books of the partnership as an intangible asset. The existing partners agree to adjust the value of goodwill in the new partner's capital account. The new partner's capital account is debited with the value of goodwill, and the existing partners' capital accounts are credited in their profit-sharing ratio. This adjustment does not affect the total capital of the partnership.
Now, let's analyze the assertion and reason provided:
Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.
This assertion is false. Goodwill can also be adjusted through the existing partners' capital accounts in their profit-sharing ratio. The adjustment is not limited to the new partner's capital account.
Reason (R): The adjustment will reduce the capital of the partner.
This reason is true. When the adjustment for goodwill is made, the new partner's capital account is debited with the value of goodwill. This will reduce the new partner's capital. However, it does not affect the total capital of the partnership as the existing partners' capital accounts are credited in their profit-sharing ratio.
Therefore, the correct answer is option (D) Assertion (A) is false, but Reason (R) is true.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.Reason (R): The adjustment will reduce the capital of the partner.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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