Why should a new partner contribute towards goodwill on his admission?
A. It is a norm B. to ensure new partner also have a stake in the business C. the firm into which he is entering already has some goodwill in the market D. to purchase the business
Correct Answer: C
Explanation
Goodwill is being paid by a new partner because the partnership he is entering into already has goodwill in the market as well as to pay for the portion sacrificed by existing partners in form to their profit to admit the new partner.
