Bihar Board Class 12 (Commerce) Accounting for Partnership Firms: Goodwill — practice questions
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Practice Bihar Board Class 12 (Commerce) Accounting for Partnership Firms: Goodwill in the app →In accounting, goodwill of a firm is classified as which kind of asset?A firm can have goodwill only when it earnsA firm that earns just the normal rate of return on its capital has goodwill equal toHeavy customer traffic and a central position raise goodwill through which factor?Monopoly or limited competition raises a firm's goodwill under which factor?Import licences, patents and long-term supply contracts add to goodwill asHigh productivity and cost efficiency in a firm point to which goodwill factor?A firm making high value added products with stable demand benefits from which goodwill factor?In which situation may a partnership firm need to value its goodwill?Besides admission, retirement and death, goodwill of a partnership may also be valued atWhich of these is an accepted way of valuing goodwill of a partnership firm?Why must partners agree on a goodwill valuation method?Profits of Rs 12,000, Rs 18,000 and Rs 24,000 carry weights 1, 2 and 3. Weighted average profit isWhen should a weighted average of past profits be used to value goodwill?If profits show a rising trend, a weighted average gives the highest weight to theSuper profit means the excess of actual profit overA firm has capital of Rs 6,00,000 and the normal rate of return is 12%. Normal profit isWhich item is excluded when finding the firm's capital for computing normal profit?Capitalised value of average profits is average profit multiplied byActual capital of the firm in the capitalisation method is total assets (excluding goodwill) lessGoodwill by capitalising average profits compared with capitalising super profits isIn capitalisation of average profits, goodwill equals capitalised value lessWhy does an incoming partner pay a premium for goodwill?Premium for goodwill brought by a new partner is shared by old partners in theirIf the new partner pays the goodwill premium privately to old partners, the firm's books showPremium paid by a new partner via the firm is first credited toPremium for Goodwill A/c is closed by crediting the capital accounts ofIf premium is first credited to the new partner's capital, it is then adjusted by debitingIf goodwill credited to old partners is left in the business, the additional entry isA and B share 3:2. C joins for 1/5 and pays Rs 10,000 premium; sacrifice is in old ratio. A getsHem and Nem sacrifice 3:2. Sam pays Rs 30,000 as premium. Hem's capital is credited withRohan brings Rs 30,000 capital and Rs 6,000 premium by cheque. Bank A/c is debited withIf the sacrificing ratio is not stated in an admission problem, it is taken as theGoodwill is the value of a firm's reputation in respect of profits expected over and aboveGoodwill can be defined as the present value of a firm's anticipatedWhich asset arises from a firm's good name, reputation and wide business connections?A person who pays for goodwill is buying the ability to earnThe super profits method values goodwill on profits that areGoodwill is recorded in accounts only when a business isUnder purchased goodwill accounting, goodwill that a firm builds on its own isUnder IFRS and US GAAP, goodwill of public companies isIf the fair value of goodwill falls below its historical cost, the firm must recordPrivate companies in the United States may elect to amortise goodwill overA company pays $50 for a business whose identifiable net assets have a fair value of $38. Goodwill isInstitutional and professional are the two types ofValue that stays with a business even after its owner leaves is which goodwill?