Test: Treatment Of Goodwill In Partnership Accounts - 1


30 Questions MCQ Test Principles and Practice of Accounting | Test: Treatment Of Goodwill In Partnership Accounts - 1


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QUESTION: 1

Find the goodwill of the firm using capitalization method from the following information:

Total Capital Employed in the firm Rs. 8,00,000
Reasonable Rate of Return 15%
Profits from the year Rs. 12,00,000 

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QUESTION: 2

What do you mean by Super profit ?

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QUESTION: 3

Under Capitalization basis goodwill is calculated by : 

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QUESTION: 4

 X and Y share profits and losses in the ratio of 2:1. They take Z as a partner and the new profit sharing ratio becomes 3:2:1. Z brings Rs. 4,500 as premium for goodwill. The full value of goodwill will be

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QUESTION: 5

Ravi and Suraj are partners having the profit sharing ratio 3:2 in a firm. They admitted Tarun in partnership and new profit sharing ratio of Ravi, Suraj and Tarun was decided at 2:2:1 respectively. Tarun brings in Rs. 30,000 as goodwill. What would be the share of Ravi in goodwill?

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QUESTION: 6

Extra amount over and above the saleable values of the identifiable assets that could be fetches by selling an existing firm as a going concern

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QUESTION: 7

A firm earned net profits during last 3 years as following :
2001 Rs. 15,000
2002 Rs. 20,000
2003 Rs. 25,000
The capital investment in the firm is Rs. 1,00,000. Having regard to risk involved 15% is the fair return on capital employed. Goodwill on basis of 2 years purchase of average Super profits earned during 3 years is :

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QUESTION: 8

The profits of last five years are Rs. 75,000, Rs. 90,000, Rs. 80,000, Rs. 1,00,000 and Rs. 80,000. Find the value of goodwill, if its calculated an average profits of last five years on the basis of 3 years of purchase: 

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QUESTION: 9

The definition ‘Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.’ 

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QUESTION: 10

The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000 and Rs. 45,000. Find out the goodwill of two years purchase

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QUESTION: 11

What do you mean by super profit?

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QUESTION: 12

The profits for 1998-99 fare Rs. 2,000 for 1999-2000 is Rs. 26,100 and for 2000-01 is R.s 31.200. Closing stock for 1999-2000 and 2000-01 includes the defective items of Rs. 2,200 and Rs. 6,200 respectively which were considered as having market value NIL. Calculate goodwill on simple  average profit method.

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QUESTION: 13

An asset which is not fictitious but intangible in nature, having realizable value ______

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QUESTION: 14

The capital of B and D are Rs. 90,000 and Rs. 30,000 respectively with the profit sharing ratio 3:1. The new ratio, admissible after 01.04.2006 is 5:3. The Goodwill is valued Rs. 80,000 as on that date. Amount payable by a gaining partner to a scarifying partner is: 

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QUESTION: 15

 A firm has an average profit of Rs. 60,000. Rate of return on Capital employed is 12.5% p.a. Total capital employed in the firm was Rs. 4,00,000. Goodwill on the basis of two years purchase of super profits is :

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QUESTION: 16

Weighted average method of calculating goodwill should be followed when: 

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QUESTION: 17

The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 & 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected form capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month. Calculate the value of goodwill on the basis of four years purchase of super profit based on the annuity of four years. Take discounting rate as 10%. 

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QUESTION: 18

Under super profit basis goodwill is calculated by: 

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QUESTION: 19

A and B are partners with the capital Rs. 50,000 and 40,000 respectively. They share profits and losses equally. C is admitted on bringing Rs. 50,000 as capital only and nothing was bought against goodwill. Goodwill in Balance sheet of Rs. 20,000 is revalued as Rs. 35,000. What will be value of goodwill in the books after the admission of C?

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QUESTION: 20

Under capitalisation basis goodwill is calculated by: 

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QUESTION: 21

Which of the following statement in false?

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QUESTION: 22

A, B and C are partners sharing profits and losses in the ratio 3:2:1. They decide to change their profit sharing ratio to 2:2:1. To give effect to this new profit sharing ratio they decide to value the goodwill at Rs. 30,000. Pass the necessary journal entry if Goodwill not appearing in the old balance sheet and should not appear in the new balance sheet.

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QUESTION: 23

A and B share profits and losses in the ratio 2:1.
C is admitted with 1/4th share in profits 
C acquired 3/4th of his share from B. New profit and loss sharing ratio will be:

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QUESTION: 24

 X and Y are partners sharing profits and losses in the ratio of 3:1. They admit Z as a partner who pays Rs. 4,000 a goodwill. The new profits sharing ratio being 2:1:1. The goodwill will be credited to

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QUESTION: 25

 The total capital of a partnership firm is Rs. 6,00,000 and annual average profits of the firm are Rs. 1,50,000. The normal rate of return in the business is considered at 20%. Find out the value of the goodwill at 3 years purchase of super profit. 

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QUESTION: 26

The profits and losses for the last years are 2001-02 Losses Rs. 10,000; 2002-03 Losses Rs. 2,500; 2003-04 Profits Rs. 98,000 & 2004-05 Profits Rs. 76,000. The average capital employed in the business is Rs. 2,00,000. The rate of interest expected form capital invested is 12%. The remuneration of partners is estimated to be Rs. 1,000 per month. Calculate the value of goodwill on the basis of two years purchase of super profit based on the average of four years. 

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QUESTION: 27

If old ratio between A & B is 1:1 & new ratio between A, B & C is 4:3:2 Recorded Good will of Rs. 90,000 appears in B/S. Which accounts will be affected if they decide to write off goodwill immediately?

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QUESTION: 28

Sacrificing ratio is used to distribute _________ on admission of a new partner:

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QUESTION: 29

X, Y and Z are partners sharing profits and losses in the ratio 5:3:2 decide to share the future profits in the ratio 2:3:5. What will be the treatment for workmen compensation fund appearing in the balance sheet on the date if no information is available for the same?

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QUESTION: 30

A & B are partners sharing profits and losses in the ratio 5:3. On admission C brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between A, B and C are 7:5:4. Find the sacrificing ratio as A:B

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