# Concept of Goodwill mcqs with Solved answers 12 cbse

## Concept of Goodwill mcqs with solved answers 12 cbse (Question 1 to 5)

1. Goodwill can be classified into:

(a) Purchased Goodwill

(b) Self generated Goodwill

(c) a and b

(d) None of these

Answer- (c) A and B

2. Goodwill is an:

(a) Tangible Assets

(b) Intangible Assets

(c) Current Assets

(d) Fictious Assets

Answer- (b) Intangible Assets

3. Need for valuation of goodwill arise?

(a) Admission of a partner

(b) Death of a partner

(c) Retirement of a partner

(d) Change in partnership.

(e) Sale of the firm

(f) All of these.

Answer- (f) All of these.

4. Following are the factor affecting goodwill except:

(a) Nature of business.

(b) Favourable location of business

(c) Effeciency of Management

(d) Nature of goods

(e) location of the customers

Answer- (e) location of the customers

5. Weighted average profit method of calculating goodwill should be followed when:

(a) Profit has increasing trends

(b) Profit has decrease trends

(c) Profit is uneven

(d)  a and b

Answer- (d)  a and b

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## Concept of Goodwill mcqs with solved answers 12 cbse (Question 6 to 10)

6. Number of year purchase?

(a) Number of years’ purchase means for how many years the firms will earn the same  amount of profit because of the past efforts.

(b) Number of years’ purchase means 12 years profit.

(c) Number of years’ purchase means 15 years future profit.

(d) Number of years’ purchase means 10 years past profit.

Answer- (a) Number of years’ purchase means for how many years the firms will earn the same  amount of profit because of the past efforts.

7. Formula for average profit?

(a) Average profit =Total Normal profits/ Number of years

(b) Average profit =Total Super profits/ Number of years

(c) Average profit =Total Weighted profits/ Number of years

(d)  None of these

Answer- (a) Average profit =Total Normal profits/ Number of years

8. Formula for super profit?

(a) Super profit= Average Profit  –  Normal profit

(b) Super profit= Normal profit – Average Profit

(c) Super profit= Weighted Average Profit  –  Normal profit

(d) Super profit= Average Profit +  Normal profit

Answer- (a) Super profit= Average Profit  –  Normal profit

9. Formula for normal profit?

(a)  Normal profit =Capital employed × Normal Rate of return /100

(b) Normal profit =Liabilities× Normal Rate of return /100

(c) Normal profit =Average profit × Normal Rate of return /100

(d) Normal profit =Super profit × Normal Rate of return /100

Answer- (a)  Normal profit =Capital employed × Normal Rate of return /100

10. Formula for valuation of goodwill on the basis of capitalisation of super profit.

(a) Goodwill =(Super profit×100)/(Normal Rate of return)

(b) Goodwill =(Normal profit×100)/(Normal Rate of return)

(c) Goodwill =(Average  profit×100)/(Normal Rate of return)

(d) Goodwill =(Super profit×Normal Rate of return /100)

Answer- (a) Goodwill =(Super profit×100)/(Normal Rate of return)

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## Concept of Goodwill mcqs with solved answers 12 cbse (Question 11 to 15)

11. Formula for weighted average profit?

(a) Weighted Average profit = Total products of profit  / Total of weights

(b) Weighted Average profit = Total Normal profit  / Total of weights

(c) Weighted Average profit = Total products of profit  / Number of years

(d) Weighted Average profit = Average profit- Normal profit

Answer- (a) Weighted Average profit = Total products of profit  / Total of weights

12. The profit for the last five years of a firm were as follows –

year 2012  4,02,000;

year 2013  3,98,000;

year 2014  4,55,000;

year 2015  4,45,000;

year 2016  5,00,000.   goodwill of the firm is to be valued on the basis of 3 years purchase of 5 years average profits. goodwill of the firm?

(a) 4,40,000

(b) 13,20,000

(c) 22,00,000

(d)  None of these

13. The books of a business showed that the capital employed on March 31, 2020,  4,00,000 and the profits for the last five years were:

March 31 2019– 50,000:

March 31 2018-  60,000;

March 31 2017-  65,000;

March 31 2016-  70,000 and

March 31 2015-  85,000. You are required to find out the value of goodwill based on 3 years purchase of the super profits of the business, given that the normal rate of return is 12%.  Value of goodwill of the firm?

(a) 66,000

(b) 48,000

(c) 18,000

(d)  54,000

14. Assets of the firms are  6,50,000 (excluding goodwill) and Liabilities are 1,50,000.  The profits for the last three years were:

March 31 2019– 58,000:

March 31 2018-  72,000;

March 31 2017- 80,000;

normal rate of return is 10%.

You are required to find out the value of goodwill On the basis of capitalisation of Average profit. Value of goodwill of the firm will be?

(a) 70,000

(b) 7,00,000

(c) 5,00,000

(d)  2,00,000

15. Assets of the firms are  7,50,000 (excluding goodwill) and Liabilities are 2,50,000.  The profits for the last three years were:

March 31 2019– 68,000:

March 31 2018-  82,000;

March 31 2017- 90,000;

normal rate of return is 10%.

You are required to find out the value of goodwill On the basis of capitalisation of Super profit.Value of goodwill of the firm?

(a) 70,000

(b) 7,00,000

(c) 5,00,000

(d)  3,00,000

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## Concept of Goodwill mcqs with solved answers 12 cbse (Question 16 to 20)

16. Rachit purchased a business on 1st April 2019. It was agreed to value goodwill at Two years purchase of average normal profits of last 4 years. The Profits are as follows.
Year Ended  31st March 2016 -90,000
31st March 2017 – 1,60,000
31st March 2018 – 1,80,000
31st March 2019- 2 20,000

Following facts are noticed–
1. During the year. ended 31/march/2016, an asset was sold at a profit of  10,000
2. During the year ended 31/March/2017, firm had incurred a abnormal loss of  20,000
3. Repairs to car amounting to  50,000 was wrongly debited to vehicles on 1st May 2017. Depreciation charged on vehicles @ 10 % on straight line Method
4. Firm had abnormal gain of  10,000 during the year. ended 31 March 2019
5. During the year ended 31 March 2019, a machine got destroyed in accident &  30,000 was written off as loss in Profit & Loss Account. Value of goodwill ?

(a) 6,40,000

(b) 1,60,000

(c) 4,80,000

(d)  3,20,000

17. The average net profits expected of a firm is future are  88000 per years and capital invested in the business by the firm is  3,50,000. The rate of interest expected from capital invested in this class of business is 12%. The renumeration of the partners is estimated to be  18,000 for the year. Calculate the value of goodwill on the basis of two years purchase of super profits. Value of goodwill ?

(a)70,000

(b) 42,000

(c) 28,000

(d)  56,000

18. Average profit earned by a firm is  75,000 which includes undervaluation of stock of  5000 on average basis. The capital invested in the business is  8,00,000 & the normal rate of return is 8 %. Calculate goodwill of the firm on the basis of 3 times the Super Profit. Value of goodwill ?

(a) 80,000

(b) 64,000

(c) 16,000

(d)  48,000

19. Average Profit of the firm is  1, 50, 000. Total tangible assets in the firm are  12,00,000 & outside liabilities are ` 7,00,000. In the same type  of business, the normal rate of return is 20 %. Calculate the value of goodwill of the firm by Capitalisation of Super Profit method . Value of goodwill ?

(a) 5,00,000

(b) 1,00,000

(c) 50,000

(d)  2,50,000

20.  The excess amount which the firm can get on selling its assets over and a above the saleable value ot its assets is called.
(a) Surplus
(b) Reserve
(c) Super Profits
(d) Goodwill

## Concept of Goodwill mcqs with solved answers 12 cbse (Question 21 to 25)

21. Which of the following is not true in relation to Goodwill-
(a) It is an Intangible Asset

(b) It is a Factious Asset
(c) It has a realisable value
(d) All of these

Answer- (b) It is a Factious Asset

22. As per Accounting Standard(AS ) 26  Goodwill will be recorded in the  books of accounts-

(a) Purchased Goodwill

(b) Self generated Goodwill

(c) Purchased Goodwill and Self generated Goodwill

(d)  None of these

Answer- (a) Purchased Goodwill

23. Super profit means-

(a) More than normal profit

(b) Less than normal profit

(c) Average profit+Normal Profit

(d)  None of these

Answer- (a) More than normal profit

24. Methods of valuation of  Goodwill –

(a) Average profit Method and Weighted average profit method

(b) Super profit Method

(c) Capitalisation of Average profit Method and Capitalisation of Super profit Method

(d)  Annuity Method

(e) All of these

Answer- (e) All of these

25. A firm earns a profit of  26,000 and has invested capital amounting to  2,20,000. In the same business normal rate of earning profit is 10%. Calculate the value of goodwill with the help of Capitalisation of super profit method. Value of goodwill ?

(a) 26,000

(b) 4,000

(c) 40,000

(d)  2,60,000

## Concept of Goodwill mcqs with solved answers 12 cbse (Question 26 to 31)

26. The capital invested in a firm is  4,60,000 and the rate of return in the similar business
is 10%. The firm earns the following profit in the last 4 years:
2018  – 70,000

2019  – 90,000
2020 – 80,000

2021  – 1,00,000
Calculate the value of goodwill by Capitalisation method. Value of goodwill ?

(a) 85,000

(b) 39,000

(c) 3,90,000

(d)  3,40,000

27. The capital invested in a firm is  4,60,000 and the rate of return in the similar business
is 10%. The firm earns the following profit in the last 4 years:
2018  – 70,000

2019  – 90,000
2020 – 80,000

2021  – 1,00,000
Calculate the value of goodwill by Capitalisation method. Value of goodwill ?

(a) 85,000

(b) 39,000

(c) 3,90,000

(d)  3,40,000

28. Capital employed ?

(a) Total assets  – Liabilities

(b) Total assets =Liabilities

(c) Total assets +Capital

(d) Total assets(Excluding goodwill)  – Liabilities

Answer- (d) Total assets(Excluding goodwill)  – Liabilities

29. “Goodwill is a thing very easy to describe, very difficult to define. It is the benefit and advantage of good name, reputation and connection of a business. It is the attractive force which brings in customers. It is one thing which distinguishes an old established business from a new business at its start.” definition ginen by…

(a) Lord Macraughton

(b) Lord Eldon

(c) Lord s.l paul

(d) Lord d.pola

Answer- (a) Lord Macraughton

30.Why is goodwill considered to be an intangible asset and not a fictitious asset? because of

(a) Goodwill can be realized

(b) Goodwill can be sold

(c) Goodwill has value

(d) All of these

Answer- (d) All of these

31.Goodwill account is a–

(a) personal account

(b) real account
(c) nominal account

(d) None of the above

Answer- (a)  personal account

## Concept of Goodwill mcqs with solved answers 12 cbse

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## Concept of Goodwill mcqs with Solved answers 12 cbse

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## Concept of Goodwill mcqs with Solved answers 12 cbse

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