A-LevelAccountingThe accounting cycle9706/12 · Feb/Mar 2016 · Q41 Mark

Omar wishes to become a trader. He decides to buy an existing business in a good location. He pays more for the business than its net asset value. How is the extra amount paid shown in the books of the new business? account to be debited account to be credited A capital goodwill B goodwill bank C goodwill capital D premises goodwill

Acapital goodwill

Bgoodwill bank

Cgoodwill capital

Dpremises goodwill

✓ Correct answer

C: goodwill capital

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Topic: The accounting cycle, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Feb/Mar 2016 Paper 1 Variant 2, question 4.

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