Admission of a Partner Test

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Admission of a Partner Test - 15

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Weekly Quiz Competition

Question 1
1 / -0

Goodwill is a _______ asset but not fictitious asset.

A
Tangible

B
Intangible

C
Personal

D
Nominal

Solution

Intangible asset in case of Goodwill is the value added to the firm which is realizable in nature, whereas fictitious assets do not posses any realizable value as they are created due to accounting entry due to the occurrence of deferred revenue expenditure.
Question 2
1 / -0

a) Dog - Goodwill 1. Fugitive good will
b) Cat - Good will 2. Locality good will
c) Rat - Good will 3. Personal good will

A
$$1, 2, 3$$

B
$$3, 2, 1$$

C
$$2, 1, 3$$

D
$$1, 3, 2$$

Question 3

1 / -0

$$A$$ and $$B$$ are partners sharing profits in the ratio of $$3 : 2$$. $$C$$ is admitted for $$1/4th$$ share of profits and brings $$Rs. 10,000$$ as his capital. But he is not able to bring in cash for his share of goodwill $$Rs. 3,000$$. How will you treat this?

Goodwill is raised by $$Rs. 12,000$$

$$C$$ will remain as debtor for $$Rs. 3,000$$

$$C's$$ A/c is debited for $$Rs. 3,000$$

Goodwill is raised by $$Rs. 9,000$$

Solution

Date	Particulars	L.F.	Dr. (Rs)	Cr. (Rs)
1.	Cash A/c		10,000
	To C’s Capital A/c			10,000

2.	C’s Capital A/c		3000
	To A’s Capital A/c (3/5)			1800
	To B’s Capital A/c (2/5)			1200

Question 4
1 / -0

During the reconstitution of partnership firm, _________ is valued.

A
Expenses

B
Incomes

C
Assets

D
Goodwill

Solution

During the reconstitution of a partnership firm, there is a change in the profit-sharing ratio of partners resulting in gain or sacrifice. To give the effect of such change in partners' capital, goodwill is valued and distributed.
Question 5
1 / -0

Which of the following is the method for valuation for Goodwill?

A
Average profit method.

B
Super profit method.

C
Capitalisation method.

D
All of the above.

Solution

Various methods have been advocated for the valuation of goodwill of a
partnership firm.The important methods of valuation of goodwill are as follows:
1. Average Profits Method
2. Super Profits Method
3. Capitalisation Method
Question 6
1 / -0

_______ is an intangible asset which arises on acquisition or is internally generated.

A
Copyrights

B
Goodwill

C
Trademarks

D
Patent

Solution

Fixed Assets are classified in to two categories i.e. tangible assets and intangible assets. Tangible assets are those which can be physically seen and existence of these appears but intangible assets are those which can not be seen physically but it has existence in the business.
Goodwill is considered as intangible assets and this appears in the business by virtue of business growth or this may be acquired while taking over the existing business.
Question 7
1 / -0

Under which of the following methods of capitalization Goodwill = Capitalised Value of Firm(avg profit) - NET Assets(capital employed).

A
Capitalisation of Super Profits Method

B
Capitalisation of NRR

C
Capitalisation of normal Profits Method

D
Capitalisation of Average Profits Method

Solution

Capitalised value of the firm(avg profit) = avg profit / NRR
Net Assets ( capital employed ) = Total assets - total liablilties
Question 8
1 / -0

Which of the following factors affect the goodwill of a firm ___________.

A
nature of business

B
location of business

C
efficiency of management

D
all of the above

Solution

Goodwill of the Business depends upon many internal and external factors of the firm such as :
a) Nature of business
b) Location of business
c) Efficiency of management
d) Market situations
e) Relationship with suppliers
d) Government policies
Question 9
1 / -0

If, average profit during last few years is $$Rs.100000$$, NRR is $$10$$%. Ascertain the value of goodwill by capitalisation of average profit method if total assets are $$Rs.1500000$$ and liabilities $$Rs.680000$$.

A
$$Rs.1,00,000$$

B
$$Rs.1,80,000$$

C
$$Rs.1,10,000$$

D
$$Rs.1,05,000$$

Solution

Here, Goodwill = Capitalised value - Net Assets.
Capitalised value = avg profit X 100/ NRR = $$1,00,000$$ X $$100$$ / $$10$$ = $$10,00,000$$
Net assets = Total asset - Total liabilities = $$15,00,000$$ - $$6,80,000$$ = $$8,20,000$$
therefore,
Goodwill = $$10,00,000$$ - $$8,20,000$$ = $$1,80,000$$
Question 10
1 / -0

Under ___________ method Goodwill is valued at the agreed number of years purchase of the average profits of the past few years.

A
Average Profit Method

B
Super Profit Method

C
Capitalization Method

D
None of Above

Solution

In case of purchase of business or reconstitution, the firm may not be able to earn much profit in operations. The Goodwill, therefore, should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.

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Admission of a Partner Test - 15

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Admission of a Partner Test - 15

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SHARING IS CARING

Question 1

Tangible

Intangible

Personal

Nominal

Solution

Question 2

$$1, 2, 3$$

$$3, 2, 1$$

$$2, 1, 3$$

$$1, 3, 2$$

Question 3

Goodwill is raised by $$Rs. 12,000$$

$$C$$ will remain as debtor for $$Rs. 3,000$$

$$C's$$ A/c is debited for $$Rs. 3,000$$

Goodwill is raised by $$Rs. 9,000$$

Solution

Question 4

Expenses

Incomes

Assets

Goodwill

Solution

Question 5

Average profit method.

Super profit method.

Capitalisation method.

All of the above.

Solution

Question 6

Copyrights

Goodwill

Trademarks

Patent

Solution

Question 7

Capitalisation of Super Profits Method

Capitalisation of NRR

Capitalisation of normal Profits Method

Capitalisation of Average Profits Method

Solution

Question 8

nature of business

location of business

efficiency of management

all of the above

Solution

Question 9

$$Rs.1,00,000$$

$$Rs.1,80,000$$

$$Rs.1,10,000$$

$$Rs.1,05,000$$

Solution

Question 10

Average Profit Method

Super Profit Method

Capitalization Method

None of Above

Solution

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