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Under fixed capital method goodwill adjustment was wrongly recorded in capital account while goodwill benefit should go to old partners current accounts. What will be the effect?

Answer and explanation

Correct answer: Fixed capital will be wrongly changed

Under fixed capital method such appropriation adjustments are made in current accounts when capital is to remain fixed. Posting them to capital account wrongly changes capital.

Related tags

Goodwill AdjustmentFixed CapitalCurrent AccountCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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