Treatment of goodwill - Jamb Accounts - Principles of Accounts Past Questions and Answers

Question 11:

• JAMB 2012

In what way can goodwill be written off in a partnership business?

A. Using the partners' profit and loss sharing ratio
B. By neglecting the ratio of partners capital contributions
C. By sharing it unequally among the partners where no agreement exists
D. By sharing it among the active partners only

Question 12:

• JAMB 2013

The amount paid by a new partner on admission as a compensation for the reputation built up by old partners is a

A. Bonus
B. Commission
C. Premium
D. Goodwill

Question 13:

• JAMB 2015

Use the information below to answer this question.
Dangote acquired Dantata’s business for N350,000. The total asset work were N820,000 and liabilities amounted to N 640,000
The double entry to record the goodwill in the books is debt

A. Purchase of business account and credit cash account
B. Goodwill account and credit purchase of business account
C. Cash account and credit goodwill account
D. Goodwill account and credit cash account

Question 14:

• JAMB 2017

Goodwill can be created in the books of a partnership firm when

A. The partnership experiences super profit
B. A new member is admitted
C. The business is being expanded
D. The business suffers high loss

Question 15:

• JAMB 2018

When goodwill is not retained in the business, the entries in the new partners books will be to debit______________

A. Goodwill account and credit partners capital account
B. Cash account and credit goodwill account
C. Goodwill account and credit cash account
D. Partners capital account and credit goodwill account