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# MCQ - Treatment of goodwill in Partnership Accounts CA Foundation Notes | EduRev

## Fundamentals of Accounting for CA CPT

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## CA Foundation : MCQ - Treatment of goodwill in Partnership Accounts CA Foundation Notes | EduRev

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Treatment of Goodwill in
Partnership Accounts
CPT Section A Fundamentals of Accountancy
Chapter 8 Unit 2 Part 1
CA. Ajay Lunawat

Page 2

Treatment of Goodwill in
Partnership Accounts
CPT Section A Fundamentals of Accountancy
Chapter 8 Unit 2 Part 1
CA. Ajay Lunawat

Question 1
The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs.
1,00,000 and Rs. 80,000. Find the value of goodwill, if it is calculated
on average profits of last five years on the basis of 3 years of purchase.
(a) Rs. 85,000.
(b) Rs. 2,55,000. (c) Rs. 2,75,000.
(d) Rs. 2,85,000. Ans (b)
Page 3

Treatment of Goodwill in
Partnership Accounts
CPT Section A Fundamentals of Accountancy
Chapter 8 Unit 2 Part 1
CA. Ajay Lunawat

Question 1
The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs.
1,00,000 and Rs. 80,000. Find the value of goodwill, if it is calculated
on average profits of last five years on the basis of 3 years of purchase.
(a) Rs. 85,000.
(b) Rs. 2,55,000. (c) Rs. 2,75,000.
(d) Rs. 2,85,000. Ans (b)
Question 2
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 for the year Rs. 12,00,000
(a) Rs. 82,00,000.
(b) Rs. 12,00,000.
(c) Rs. 72,00,000.
(d) Rs. 42,00,000 Ans (c)
Page 4

Treatment of Goodwill in
Partnership Accounts
CPT Section A Fundamentals of Accountancy
Chapter 8 Unit 2 Part 1
CA. Ajay Lunawat

Question 1
The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs.
1,00,000 and Rs. 80,000. Find the value of goodwill, if it is calculated
on average profits of last five years on the basis of 3 years of purchase.
(a) Rs. 85,000.
(b) Rs. 2,55,000. (c) Rs. 2,75,000.
(d) Rs. 2,85,000. Ans (b)
Question 2
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 for the year Rs. 12,00,000
(a) Rs. 82,00,000.
(b) Rs. 12,00,000.
(c) Rs. 72,00,000.
(d) Rs. 42,00,000 Ans (c)
Question 3
• Under average profit basis goodwill is calculated by:
(a) No. of years purchased multiplied with average profits.
(b) No. of years purchased multiplied with super profits.
(c) Summation of the discounted value of expected future
benefits.
(d) Super profit divided with expected rate of return.
Ans (a)
Page 5

Treatment of Goodwill in
Partnership Accounts
CPT Section A Fundamentals of Accountancy
Chapter 8 Unit 2 Part 1
CA. Ajay Lunawat

Question 1
The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs.
1,00,000 and Rs. 80,000. Find the value of goodwill, if it is calculated
on average profits of last five years on the basis of 3 years of purchase.
(a) Rs. 85,000.
(b) Rs. 2,55,000. (c) Rs. 2,75,000.
(d) Rs. 2,85,000. Ans (b)
Question 2
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 for the year Rs. 12,00,000
(a) Rs. 82,00,000.
(b) Rs. 12,00,000.
(c) Rs. 72,00,000.
(d) Rs. 42,00,000 Ans (c)
Question 3
• Under average profit basis goodwill is calculated by:
(a) No. of years purchased multiplied with average profits.
(b) No. of years purchased multiplied with super profits.
(c) Summation of the discounted value of expected future
benefits.
(d) Super profit divided with expected rate of return.
Ans (a)
Question 4
• Under super profit basis goodwill is calculated by:
(a) No. of years purchased multiplied with average profits.
(b) No. of years purchased multiplied with super profits.
(c) Summation of the discounted value of expected future benefits.
(d) Super profit divided with expected rate of return.
Ans (b)
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## Fundamentals of Accounting for CA CPT

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