Deck 5: Goodwill and Intangible Assets

Question 1

Goodwill is defined as

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

Answer 1

Intangible asset

Question 2

Break-even indicates

A)Revenues are more than cost
B)Revenues and cost are equal
C)Costs are more than revenue
D)None of the Above

Answer 2

Revenues and cost are equal

Question 3

The excess amount which the firm can get on selling its assets over and above the saleablevalue of its assets is called

A)Surplus
B)Super Profit
C)Reserve
D)Goodwill

Answer 3

Goodwill

Question 4

A firm's goodwill is not affected by

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

Question 5

Weighted average method of calculating goodwill is used when

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

Question 6

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

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 7

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

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

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 capitalisation ofaverage actual profit will be

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

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

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

Question 10

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

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

Question 11

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

Question 12

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

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

Question 13

The amount of goodwill is paid by new partner :

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

Question 14

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

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

Question 15

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

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

Question 16

Valuation of ------------- Assets is difficult.

A)Intangible
B)Wasting
C)Current
D)all

Question 17

Following are forms of Intangible assets.

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

Question 18

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

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

Question 19

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

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

Question 20

This is the feature of Intangible assets

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

Question 21

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

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

Question 22

An exclusive legal right in the form of Logo, Brand, Symbol, Name of Design is known as ----

A)Trademark
B)Patent Right
C)Copy Right
D)all

Question 23

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---------

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

Question 24

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

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

Question 25

An exclusive right given to an entity of individual or business firm to manufacture or sellan invention is known as

A)Copyright
B)Trade right
C)Patent right
D)all