Book Keeping & Accountancy State whether the following statements are true or false with reasons

This statement is True.
When a new partner brings his share of goodwill, old partners have the right to withdraw it in cash. Therefore, when old partners withdraw the amount of goodwill, cash goes out from the firm and not goodwill. Hence Cash/Bank A/c is credited.

This statement is True.
When a new partner is admitted to the firm, he brings his share of capital and goodwill, in cash or in-kind, to enjoy the right of sharing the future profit, and hence there will be an increase in the capital of the firm.

This statement is False.
When a new partner is admitted, old partners have to sacrifice their profit share in favour of the new partner and their old ratio gets reduced and whatever ratio is left becomes a new ratio. Hence, as per equation:
New Ratio = Old Ratio – Sacrifice Ratio.
By interchanging the terms,
Sacrifice Ratio = Old Ratio – New Ratio.

This statement is False.
To write off goodwill means to decrease or wipe out the value of goodwill. When goodwill as an asset of the business is raised, Goodwill A/c is debited in the books of Account. Conversely, when Goodwill is written off from the business, the Goodwill A/c is credited in the books of business.

This statement is False.
When a new person is admitted to the partnership firm, the old partners surrender a certain share in profit and give it to a new partner. In exchange for that new partner is required to bring goodwill in cash or in kind. If he is unable to bring cash for goodwill, then Goodwill is raised and adjusted to the new partner’s capital A/c.

This statement is True.
When any person joins the business as a partner, a change in the relationship takes place. The old agreement is terminated and a new agreement is prepared. There is the change in profit or loss sharing ratio and relationship of the partners which is known as Reconstitution of Partnership.

This statement is False.
Revaluation profit arises due to efforts and hardworking of the old partners in the past and hence profit earned on revaluation of assets and liabilities at the time of admission of a person as a partner in the business belongs to old partners. So, such profit is not distributed among all partners including the new partners. It is distributed only among old partners.

This statement is False.
At the time of admission of a person, in the business, sacrifices are made by the old partners in favour of the new partner. It means there is no question of any gain to the partners, so we can say that the Gain ratio is not calculated at the time of admission of a partner.

This statement is True.
When goodwill is paid privately to the partners, by a newly admitted person, then in such case no transaction takes place in the business, and the firm as such is not all benefited. Hence it is not recorded in the books of accounts.

This statement is True.
As per the provision of partnership deed, when any person is admitted in the firm, he has to bring some amount as capital which can be in cash or in-kind of assets to get rights in the assets and definite share in the future profit of the firm.

This statement is False.
When a firm earns extra profit over and above the normal profit because of the reputation of the firm then it is known as a super profit and not average profit.

This statement is True.
When a partner takes away any asset from the business, Asset Account will be credited and the Partner’s Account will be debited as it decreases the partner’s capital.

This statement is True.
At the time of Retirement or Death of a partner, existing partners may have some gain, which is found out by the Gain ratio = New ratio – Old ratio.

This statement is True.
The reputation of business measured in terms of money is known as goodwill and on this, old partners have right so when goodwill is brought in by a new partner in the business, it is shared by the old partner.

This statement is True.
At the time of admission of a new partner, existing assets and liabilities of the business are to be revalued and whatever the profit or loss is there it is to be distributed among old partners only.

This statement is False.
General reserve is the amount kept aside from the part and current profit earned by the business for future business development purposes. Hence on this amount, the new partner has no right. Therefore new partner is not entitled to receive a share in general reserve.

This statement is True.
When newly admitted partner brought cash for goodwill, Cash/Bank Account is debited as it comes in and Goodwill Account is credited and afterward, Goodwill Account will be debited when benefits of Goodwill are transferred to old partners’ Capital Accounts.

This statement is True.
As per the rules of Accountancy when the value of an asset increases or raises, its account is debited in the books of account. Goodwill is an Asset.

This statement is False.
The credit balance of the Revaluation Account means profit on revaluation of assets and liabilities. Revaluation A/c is nominal A/c. On the credit side of this A/c, all incomes and gains are recorded. The credit balance means the credit amount is more than the debt amount. Hence, the credit balance of the Revaluation Account is profit on the revaluation of assets and liabilities.