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

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 Page 1


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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