Question

Arrange the admission procedure in correct sequence: (A) Giving share to the new partner.
(B) Treatment of Goodwill.
(C) Calculating new profit sharing ratio and sacrificing ratio.
(D) Preparation of Revaluation A/c.
(E) Preparing Partner's Capital A/c and Balance Sheet.

• A. (A), (B), (C), (D), (E)
• B. (A), (C), (B), (D), (E)
• C. (A), (D), (C), (B), (E)
• D. (A), (B), (C), (E), (D)

Hint:

Admission of a partner always follows this order: Share → New Ratio → Goodwill → Revaluation → Balance Sheet.

Answer 1

The Correct Option is B

When a new partner joins the firm, the steps involved in accounting adjustments are as follows:

1. Determine the new partner's share first. (A)
2. Adjust the old partners' profit-sharing ratios to establish the new and sacrificing ratios. (C)
3. Account for goodwill by compensating the sacrificing partners. (B)
4. Revalue the firm's assets and liabilities, preparing a Revaluation Account. (D)
5. Finally, prepare the partners' capital accounts and the new Balance Sheet. (E)

The correct sequence of these steps is (A), (C), (B), (D), (E). Final Answer: \[ \boxed{(A), (C), (B), (D), (E)} \]