Question 1

Weighted average method of calculating goodwill is used when

Accepted Answer

A) Profits are not equal 
B) Profits show an increasing or decreasing trend 
C) Profits are Fluctuating 
D) None of the Above 
A) Profits are not equal 
B) Profits show an increasing or decreasing trend 
C) Profits are Fluctuating 
D) None of the Above B

Question 2

This is the feature of Intangible assets

Accepted Answer

A) They are valuable to internal and external entities. 
B) They are always acquired. 
C) They may be internally created or purchased 
D) all 
A) They are valuable to internal and external entities. 
B) They are always acquired. 
C) They may be internally created or purchased 
D) all C

Question 3

An asset which does not have a physical form but has the potential to have a monetaryvalue is known as an -------------

Accepted Answer

A) Fictitious Asset 
B) Physical Asset 
C) Intangible Asset 
D) all 
A) Fictitious Asset 
B) Physical Asset 
C) Intangible Asset 
D) all C

Question 4

Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by:

Accepted Answer

A) Spicer and Pegler 
B) ICAI 
C) Lord Elton 
D) AICPA 
A) Spicer and Pegler 
B) ICAI 
C) Lord Elton 
D) AICPA

Question 5

The total capital employed in the company is ?8,00,000 a reasonable rate of return is 15%and the profit of the year is 12,00,000. The value of goodwill of the company as per thecapitalisation method will be

Accepted Answer

A) RS 82,00,000 
B) RS 1200000 
C) RS 7200000 
D) RS 4200000 
A) RS 82,00,000 
B) RS 1200000 
C) RS 7200000 
D) RS 4200000

Question 6

Goodwill is defined as

Accepted Answer

A) Intangible asset 
B) Fictitious asset 
C) Current asset 
D) Liquid asset 
A) Intangible asset 
B) Fictitious asset 
C) Current asset 
D) Liquid asset

Question 7

When there is no Goodwill Account in the books and goodwill israised,…………….account will be debited

Accepted Answer

A) Partner's Capital 
B) Goodwill 
C) Cash 
D) Reserve 
A) Partner's Capital 
B) Goodwill 
C) Cash 
D) Reserve

Question 8

A unique name of symbol or design given to a product or service for easy identification and distinguishing it from the competitor is known as---------

Accepted Answer

A) Patent Right 
B) Trade Secret 
C) Brand 
D) all 
A) Patent Right 
B) Trade Secret 
C) Brand 
D) all

Question 9

When there is a change in the current partners' association that results in ending the existingagreement and initiate a formation of a new agreement is known as

Accepted Answer

A) Revaluation of Partnership 
B) Reconstitution of Partnership 
C) Realisation of Partnership 
D) None of the Above 
A) Revaluation of Partnership 
B) Reconstitution of Partnership 
C) Realisation of Partnership 
D) None of the Above

Question 10

At the time of admission of a new partners general reserve appearning in the old Balance Sheet is transferred to:

Accepted Answer

A) All Partner's Capital Accounts 
B) New Partner's Capital Account 
C) Old Partners'. Capital Accounts 
D) None of these 
A) All Partner's Capital Accounts 
B) New Partner's Capital Account 
C) Old Partners'. Capital Accounts 
D) None of these

Question 11

A firm's goodwill is not affected by

Accepted Answer

A) Location of the firm 
B) The reputation of the Firm 
C) Better Customer Service 
D) None of the Above 
A) Location of the firm 
B) The reputation of the Firm 
C) Better Customer Service 
D) None of the Above

Question 12

The value of Intangible assets is ------------- over a period of time.

Accepted Answer

A) Amortized 
B) Added 
C) Depreciated 
D) all 
A) Amortized 
B) Added 
C) Depreciated 
D) all

Question 13

Following are forms of Intangible assets.

Accepted Answer

A) Brand, Goodwill, Furniture, Design 
B) Goodwill, Patent Rights, Machinery 
C) Brand, Trademark, Copyrights, Know how 
D) all 
A) Brand, Goodwill, Furniture, Design 
B) Goodwill, Patent Rights, Machinery 
C) Brand, Trademark, Copyrights, Know how 
D) all

Question 14

Intangibility refers to ------------------

Accepted Answer

A) Economic benefit 
B) Absence of future value 
C) Absence of physical form and creation. 
D) all 
A) Economic benefit 
B) Absence of future value 
C) Absence of physical form and creation. 
D) all

Question 15

The amount of goodwill is paid by new partner :

Accepted Answer

A) for the payment of capital 
B) for sharing the profit 
C) for purchase of assets 
D) None of these 
A) for the payment of capital 
B) for sharing the profit 
C) for purchase of assets 
D) None of these

Question 16

Under the capitalisation method, the formula for calculating the goodwill is

Accepted Answer

A) Super profits multiplied by the rate of return 
B) Average profits multiplied by the rate of return 
C) Super profits divided by the rate of return 
D) Average profits divided by the rate of return 
A) Super profits multiplied by the rate of return 
B) Average profits multiplied by the rate of return 
C) Super profits divided by the rate of return 
D) Average profits divided by the rate of return

Question 17

A bundle of rights given by law to the creators of literary, artistic, dramatic, musical workis known as

Accepted Answer

A) Patent Rights 
B) Trade Rights 
C) Copyrights 
D) all 
A) Patent Rights 
B) Trade Rights 
C) Copyrights 
D) all

Question 18

The following statement stands true when intangible assets are compared to the currentassets

Accepted Answer

A) Useful life is short 
B) Useful life is moderate 
C) Useful life is long 
D) all 
A) Useful life is short 
B) Useful life is moderate 
C) Useful life is long 
D) all

Question 19

Goodwill is to be calculated at one and half year' purchase of average profit of last 5years. The firm earned profits during 3 years as ? 20,000 ? 18,000 and ? 9,000 and sufferedlosses of ? 2,000 and ?5,000 in last 2 years. The amount of goodwill will be

Accepted Answer

A) Rs 12000 
B) Rs 10000 
C) Rs 15000 
D) None of the Above 
A) Rs 12000 
B) Rs 10000 
C) Rs 15000 
D) None of the Above

Question 20

A firm earns ?1,00,000. The normal rate of return is 10%. The assets of the companyamounted to ?11,00,000 and liabilities to ?1,00,000. Value of goodwill by the capitalisation ofaverage actual profit will be

Accepted Answer

A) Rs 200000 
B) Rs 10000 
C) Rs 5000 
D) Rs 100000 
A) Rs 200000 
B) Rs 10000 
C) Rs 5000 
D) Rs 100000

Exam 5: Goodwill and Intangible Assets

Weighted average method of calculating goodwill is used when

This is the feature of Intangible assets

An asset which does not have a physical form but has the potential to have a monetaryvalue is known as an -------------

Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by:

The total capital employed in the company is ?8,00,000 a reasonable rate of return is 15%and the profit of the year is 12,00,000. The value of goodwill of the company as per thecapitalisation method will be

Goodwill is defined as

When there is no Goodwill Account in the books and goodwill israised,…………….account will be debited

A unique name of symbol or design given to a product or service for easy identification and distinguishing it from the competitor is known as---------

When there is a change in the current partners' association that results in ending the existingagreement and initiate a formation of a new agreement is known as

At the time of admission of a new partners general reserve appearning in the old Balance Sheet is transferred to:

A firm's goodwill is not affected by

The value of Intangible assets is ------------- over a period of time.

Following are forms of Intangible assets.

Intangibility refers to ------------------

The amount of goodwill is paid by new partner :

Under the capitalisation method, the formula for calculating the goodwill is

A bundle of rights given by law to the creators of literary, artistic, dramatic, musical workis known as

The following statement stands true when intangible assets are compared to the currentassets

Goodwill is to be calculated at one and half year' purchase of average profit of last 5years. The firm earned profits during 3 years as ? 20,000 ? 18,000 and ? 9,000 and sufferedlosses of ? 2,000 and ?5,000 in last 2 years. The amount of goodwill will be

A firm earns ?1,00,000. The normal rate of return is 10%. The assets of the companyamounted to ?11,00,000 and liabilities to ?1,00,000. Value of goodwill by the capitalisation ofaverage actual profit will be

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