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Goodwill is brought in cash and half of it is retained in business. What will be the final cash effect?

Answer and explanation

Correct answer: Cash will increase by half of goodwill

The full amount first comes in and half is withdrawn. So final cash increase equals half of goodwill.

Related tags

Cash EffectRetained GoodwillReasoningGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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