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JAMB Principles of Accounts 2011 Question 43

Question 43

Partnership Admission, Retirement and Dissolution

Goodwill is determined using

  1. A.capital contribution of old partners
  2. B.number of partners admitted
  3. C.the business and customer relations
  4. D.number of active partners.
Show the answer and explanation

Answer: C (the business and customer relations)

Explanation

Goodwill comes from the firm's reputation and its relations with customers, which bring in future profits.