Goodwill is (₹100000). Old ratio is (3:2) and new ratio is (2:3). What is net effect on A when goodwill is raised and written off?

Correct answer: Credit A (₹20000)

Direct answer: Option A, Credit A ₹20,000. When goodwill is raised, A is credited in the old ratio because the old partners are treated as contributing the goodwill. A’s old share is 3/5, so ₹100,000 × 3/5 = ₹60,000 credit. When goodwill is written off, A is debited in the new ratio. A’s new share is 2/5, so ₹100,000 × 2/5 = ₹40,000 debit. Net effect = ₹60,000 credit − ₹40,000 debit = ₹20,000 credit. Option A is correct. Option B reverses the final direction; the credit is larger than the debit. Option C is wrong because the two amounts are not equal. Option D wrongly treats the whole goodwill as belonging to A, instead of applying the ratios. Memory cue: raising uses the old ratio; writing off uses the new ratio.