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When goodwill is retained in business old partners' capitals increase and cash also increases. Why does this happen?

Answer and explanation

Correct answer: Goodwill came in cash and was not withdrawn

The new partner brings cash and old partners do not withdraw it. So cash stays in business and capital is credited.

Related tags

Retained GoodwillCash Capital EffectReasoningGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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