Admission of a Partner Test

Result

Admission of a Partner Test - 14

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Weekly Quiz Competition

Question 1
1 / -0

The formula of average profit method is __________.

A
$$\dfrac {Total\ Profits}{No. of \ years}$$

B
Super Profit $$-$$ Normal Profit

C
Super Profit $$\times$$ No. of years

D
$$\dfrac {Super\ profit}{Normal\ profit}$$

Solution

Average profit method is the simplest and the most commonly used method of the valuation of goodwill. Under this method, goodwill is calculated on the basis of calculating of average of profits of the firm in past years.
Question 2
1 / -0

'Dogs' is applicable in case of professional services like ______________.

A
Lawyers

B
Doctors

C
Traders

D
Both (A) and (B)
Question 3
1 / -0

Factor(s) affecting the value of goodwill is/are _____________.

A
Quality

B
Location or site

C
Competition

D
All the above
Question 4
1 / -0

If the purchase price exceeds the net assets taken over, the difference is treated as ___________.

A
Capital given

B
Goodwill

C
Capital reserve

D
Capital loss

Solution

Goodwill arises when a company acquires another entire business. The amount of goodwill is the cost to purchase the business minus the fair market value of the tangible assets, the intangible assets that can be identified, and the liabilities obtained in the purchase.
Question 5
1 / -0

________ may be defined as the value of the reputation of the firm.

A
Capital

B
Goodwill

C
Drawings

D
Assets

Solution

A business builds up some reputation after it has continued for sometime. If the reputation is good it will come to acquire a fixed "CLIENTELE" . This very valuable asset even if one cannot feel or touch or see is defined as Goodwill.
Question 6
1 / -0

When an incoming partner purchases his share from any one of the existing partners, then:

A
Total assets of the firm do not change

B
Total assets of the firm will be augmented to the extent of payment received from the new partner

C
Total assets of the firm will be reduced to the extent of payment received from the new partner

D
Change in total assets of the firm will depend upon the new profit sharing ratio of the partners

Solution

The incoming partner may purchase his share either from the existing partners or may contribute to the assets of the firm.
In the given case, the incoming partner is purchasing the share from existing partners and hence that shall not augment the assets.
Note:In case the incoming partner would have contributed towards the assets of the firm, the assets of the firm would have been augmented.
Question 7
1 / -0

Identity the item which does not include under Current Account transaction__________________.

A
Services

B
Non-monetary movement of gold

C
Unilateral transfer

D
Investment income
Question 8
1 / -0

Which of the following refers to a situation in which the merger of companies results in over $$25$$% of the market in the hands of the merged companies?

A
'Gateway' condition

B
Restrictive practice

C
'Share of supply' test

D
'Asset' test
Question 9
1 / -0

Calculate the goodwill for 3 years of purchase on the average profit basis.
year
2014
2015
2016
2017
profit
50000
60000
80000
30000

A
$$Rs.140000$$

B
$$Rs.150000$$

C
$$Rs.165000$$

D
$$Rs.175000$$

Solution

Goodwill as per average profit method = average profit X No. of years purchases
Average Profit = sum of profits / no. of years
= $$50000$$+$$60000$$+$$80000$$+$$30000$$ /$$4$$
= $$RS.55000$$
therefore,
Goodwill = $$Rs.55000$$ x $$3$$ years of purchases = $$Rs.165000$$
Question 10
1 / -0

________ may be defined as the value of the reputation of the firm.

A
Capital

B
Goodwill

C
Drawings

D
Assets

Solution

A business builds up some reputation after it has continued for sometime. If the reputation is good it will come to acquire a fixed "CLIENTELE" . This very valuable asset even if one cannot feel or touch or see is defined as Goodwill.

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year	2014	2015	2016	2017
profit	50000	60000	80000	30000

Admission of a Partner Test - 14

Result

Admission of a Partner Test - 14

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Rank

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SHARING IS CARING

Question 1

$$\dfrac {Total\ Profits}{No. of \ years}$$

Super Profit $$-$$ Normal Profit

Super Profit $$\times$$ No. of years

$$\dfrac {Super\ profit}{Normal\ profit}$$

Solution

Question 2

Lawyers

Doctors

Traders

Both (A) and (B)

Question 3

Quality

Location or site

Competition

All the above

Question 4

Capital given

Goodwill

Capital reserve

Capital loss

Solution

Question 5

Capital

Goodwill

Drawings

Assets

Solution

Question 6

Total assets of the firm do not change

Total assets of the firm will be augmented to the extent of payment received from the new partner

Total assets of the firm will be reduced to the extent of payment received from the new partner

Change in total assets of the firm will depend upon the new profit sharing ratio of the partners

Solution

Question 7

Services

Non-monetary movement of gold

Unilateral transfer

Investment income

Question 8

'Gateway' condition

Restrictive practice

'Share of supply' test

'Asset' test

Question 9

$$Rs.140000$$

$$Rs.150000$$

$$Rs.165000$$

$$Rs.175000$$

Solution

Question 10

Capital

Goodwill

Drawings

Assets

Solution

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