When goodwill is added to retiring partner's capital what happens to amount due to him?

Correct answer: It increases

The correct answer is A: the amount due increases. Goodwill represents the value of the firm's reputation, customer relationships, and other advantages that help it earn profits. When a partner retires, that partner is entitled to compensation for the goodwill share built up while participating in the firm, according to the applicable agreement and adjustment. If goodwill is added to the retiring partner's capital account, the credit increases the balance payable to that partner. Option A is correct because an added credit makes the final amount due larger. Option B is wrong because adding a credit does not reduce the balance. Option C is wrong because the amount does not automatically become zero; settlement may occur through cash, transfer to a loan account, or another agreed method. Option D is wrong because a gaining ratio is a proportion used for adjustment, not money due to the partner. Exam cue: credit for goodwill increases the retiring partner's claim; debit decreases it.