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What effect does consistently providing good service have on a firm's goodwill?

Answer and explanation

Correct answer: Goodwill increases

Consistently good service keeps customers satisfied and loyal to the firm. This improves the firm's reputation and its ability to earn future profits, so its goodwill increases. Good service does not convert goodwill into a liability or a bank loan. Exam tip: Remember good service, product quality and business reputation as important factors affecting goodwill.

Related tags

GoodwillPartnership AccountsService QualityBusiness ReputationCustomer LoyaltyPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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