WAEC Accounting 2015 Objective — Question 34

Question 34 of 50 from the West African Examinations Council (WAEC) Accounting 2015 Objective paper, with the correct answer and a full explanation.

Goodwill is recognized in partnership accounts when

A. the business makes a huge profit
B. the business has good customer relationship
C. a partner is dormant
D. a new partner is admittedCorrect

Explanation

When a new partner is admitted, it becomes necessary to revalue the business to account for the goodwill built up by the existing/old partners over their years of operation.

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