Question 1

Weighted average method of calculating goodwill is used when

Accepted Answer

A) Profits are not equal 
B) Profits show a trend 
C) Profits are fluctuating 
D) None of the above 
A) Profits are not equal 
B) Profits show a trend 
C) Profits are fluctuating 
D) None of the above B

Question 2

Patent Royalty is based on

Accepted Answer

A) Production 
B) Sales 
C) Purchase 
D) Both A and B 
A) Production 
B) Sales 
C) Purchase 
D) Both A and B A

Question 3

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 412,00,000. The value of goodwill of the company as per thecapitalization method will be

Accepted Answer

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

Question 4

The profits of the last three years is 42000, 39000,45000. Value of goodwill of 2 years purchase of average profit is

Accepted Answer

A) 84000 
B) 42000 
C) 126000 
D) None 
A) 84000 
B) 42000 
C) 126000 
D) None

Question 5

What is Royalty?

Accepted Answer

A) A payment is made for the use of Assets 
B) A fixed payment for the use of Fixed Assets 
C) Payment made by owners 
D) None of the above 
A) A payment is made for the use of Assets 
B) A fixed payment for the use of Fixed Assets 
C) Payment made by owners 
D) None of the above

Question 6

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the valueof goodwill at five years of purchase is -----------

Accepted Answer

A) Rs12,50,000/- 
B) Rs 7,50,000/- 
C) Rs10,00,000/- 
D) all 
A) Rs12,50,000/- 
B) Rs 7,50,000/- 
C) Rs10,00,000/- 
D) all

Question 7

The monetary value of reputation of business is called

Accepted Answer

A) Goodwill 
B) Suer profit 
C) Surplus 
D) None of the above 
A) Goodwill 
B) Suer profit 
C) Surplus 
D) None of the above

Question 8

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 capitalization of average actual profit will be

Accepted Answer

A) 2,00,000 
B) 10000 
C) 5000 
D) 100000 
A) 2,00,000 
B) 10000 
C) 5000 
D) 100000

Question 9

Goodwill is an intangible Assets

Accepted Answer

A) True 
B) False 
C) none 
D) all 
A) True 
B) False 
C) none 
D) all

Question 10

Goodwill be purchased

Accepted Answer

A) True 
B) False 
C) none 
D) all 
A) True 
B) False 
C) none 
D) all

Question 11

When does need valuation of Goodwill

Accepted Answer

A) On retirement or Death of a partner 
B) Admission of Partner 
C) None of the Above 
D) Both 
A) On retirement or Death of a partner 
B) Admission of Partner 
C) None of the Above 
D) Both

Question 12

Which methods of valuation of Goodwill

Accepted Answer

A) Super profits 
B) Average profits 
C) Both 
D) None 
A) Super profits 
B) Average profits 
C) Both 
D) None

Question 13

Mining Royalty is based on

Accepted Answer

A) Production 
B) Sales 
C) Purchase 
D) Both A and B 
A) Production 
B) Sales 
C) Purchase 
D) Both A and B

Question 14

The excess of Average profit over normal profit is called

Accepted Answer

A) Super profit 
B) Normal profit 
C) Fixed profit 
D) Abnormal profit 
A) Super profit 
B) Normal profit 
C) Fixed profit 
D) Abnormal profit

Question 15

Goodwill will have no effect on business Financial status

Accepted Answer

A) True 
B) False 
C) none 
D) all 
A) True 
B) False 
C) none 
D) all

Question 16

Goodwill is defined as

Accepted Answer

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

Question 17

If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit

Accepted Answer

A) Rs 8,00,000 
B) Rs 6,00,000 
C) Rs 4,50,000 
D) all 
A) Rs 8,00,000 
B) Rs 6,00,000 
C) Rs 4,50,000 
D) all

Question 18

The profits of the last three years is55000,50000,45000. Value of goodwill of 2 yearspurchase of average profit is

Accepted Answer

A) 100000 
B) 42000 
C) 126000 
D) None 
A) 100000 
B) 42000 
C) 126000 
D) None

Question 19

Which methods of valuation of Goodwill

Accepted Answer

A) Super Profit 
B) Capitalization 
C) Average Profit 
D) All of the Above 
A) Super Profit 
B) Capitalization 
C) Average Profit 
D) All of the Above

Question 20

If the amount of super profit is negative ,what des it indicate

Accepted Answer

A) There is no goodwill 
B) There is average goodwill 
C) Both 
D) None 
A) There is no goodwill 
B) There is average goodwill 
C) Both 
D) None

Exam 6: Valuation and Calculation of Goodwill

Weighted average method of calculating goodwill is used when

Patent Royalty is based on

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 412,00,000. The value of goodwill of the company as per thecapitalization method will be

The profits of the last three years is 42000, 39000,45000. Value of goodwill of 2 years purchase of average profit is

What is Royalty?

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the valueof goodwill at five years of purchase is -----------

The monetary value of reputation of business is called

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 capitalization of average actual profit will be

Goodwill is an intangible Assets

Goodwill be purchased

When does need valuation of Goodwill

Which methods of valuation of Goodwill

Mining Royalty is based on

The excess of Average profit over normal profit is called

Goodwill will have no effect on business Financial status

Goodwill is defined as

If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit

The profits of the last three years is55000,50000,45000. Value of goodwill of 2 yearspurchase of average profit is

Which methods of valuation of Goodwill

If the amount of super profit is negative ,what des it indicate

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Depreciation, Share Capital, and Forfeiture of Shares

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Accounting and Bookkeeping

Allocation of Selling Expenses Among Departments Based on Sales

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Accounting and Financial Transactions

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Capitalization, Errors, Cash Book, and Types of Accounts

Revenue Recognition and Expenditure Classification

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Accounting Adjustments and Financial Statement Treatment

Balance Sheet and Profit Loss Account

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Accounting for Co-Venturers, Consignments, and Branches

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