Goodwill: Meaning and Valuation Quiz-1

Goodwill: Meaning and Valuation Quiz-1

Quiz

 

1. A firm’s goodwill is not affected by
   1.   Location of the firm
   2.   The reputation of the Firm
   3.   Better Customer Service
   4.   None of the Above
2. If the amount of super profit is negative, what does is mean?
   1.   There is no goodwill
   2.   There is average goodwill
   3.   Both of the above
   4.   None of the above
3. What is the formula for the valuation of goodwill based on the capitalization of super profit?
   1.   Goodwill equals to average profit multiplied by 100 divided by the normal rate of return.
   2.   Goodwill equals super profit multiplied by 100 divided by the normal rate of return.
   3.   Goodwill equals super profit multiplied by the normal rate of return divided by 100.
   4.   Goodwill equals normal profit multiplied by 100 divided by the normal rate of return.
4. What kind of an account is a goodwill account?
   1.   Real a/c.
   2.   Nominal a/c.
   3.   Personal a/c.
   4.   Not an a/c.
5. The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called
   1.   Surplus
   2.   Super Profit
   3.   Reserve
   4.   Goodwill
6. Under the capitalisation method, the formula for calculating the goodwill is
   1.   Super profits multiplied by the rate of return
   2.   Average profits multiplied by the rate of return
   3.   Super profits divided by the rate of return
   4.   Average profits divided by the rate of return
7. capitalisation method for goodwill is used when:
   1.   super profit is calculated
   2.   total assets are given
   3.   business is sold
   4.   No. of years purchase is not given
8. Goodwill of the firm is valued at 3 years purchase of simple average profit of last 4 years. Goodwill was calculated Rs. 1,68,000. Total profit of last four years were:
   1.   56,000
   2.   2,24,000
   3.   1,68,000
   4.   1,26,000
9. Weighted average method of calculating goodwill is used when
   1.   Profits are not equal
   2.   Profits show an increasing or decreasing trend
   3.   Profits are Fluctuating
   4.   None of the Above
10. As per accounting standards 26, which goodwill can be recorded in the book of accounts?
    1.   Purchased goodwill.
    2.   Self-generated goodwill.
    3.   Both self-generated & purchased goodwill.
    4.   None of the above.
11. A firm earns ₹1,00,000. The normal rate of return is 10%. The assets of the company amounted to ₹11,00,000 and liabilities to ₹1,00,000. Value of goodwill by the capitalisation of average actual profit will be
    1.   ₹ 2,00,000
    2.   ₹ 10,000
    3.   ₹ 5,000
    4.   None of the above
12. Are non-business incomes added while calculating average profit?
    1.   No.
    2.   Yes.
    3.   Partially added.
    4.   None of the above.
13. In what ways can a business acquire purchased goodwill?
    1.   By kind.
    2.   By cash.
    3.   By both cash and kind.
    4.   None of the above.
14. What is capital employed?
    1.   Total assets added to capital.
    2.   Total assets equaling liabilities.
    3.   Liabilities are deducted from total assets excluding fictitious assets
    4.   Liabilities are deducted from total assets excluding goodwill, fictitious assets and non trade investment.
15. What is the formula for calculating the weighted average profit ?
    1.   Weighted average profit equals total normal profit divided by the total amount of weights.
    2.   Weighted average profit equals to total product of profit divided by the number of years.
    3.   Weighted average profit equals average profit minus normal profit.
    4.   Weighted average profit equals total products of profit divided by the total amount of weights.
16. Goodwill is considered to be an intangible asset & not a fictitious one because
    1.   Goodwill has value.
    2.   Goodwill can be sold.
    3.   Goodwill can be realized.
    4.   All of the above-mentioned points.
17. Goodwill is classified into
    1.   Self-generated goodwill.
    2.   Purchased goodwill.
    3.   Both self-generated & purchased.
    4.   None of the above.
18. X and Y are partners. They have provided following information on the admission of a new partner Z. Share capital = 10,00,000 ; Reserves & surplus = 3,00,000; Outside liabilities = 3,00,000; Total asset = 16.00,000 (Including Miscellaneous expenditure of Rs.1,00,000). Capital employed of the firm is :
    1.   13,00,000
    2.   12,00,000
    3.   16,00,000
    4.   10,00,000
19. The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 12,00,000. The value of goodwill of the company as per the capitalisation method will be
    1.   ₹ 82,00,000
    2.   ₹ 12,00,000
    3.   ₹ 72,00,000
    4.   ₹ 42,00,000
20. What is meant by the number of years purchase?
    1.   The number of years’ purchase means 12 years of profit.
    2.   It means the profit that is expected in the next 15 years.
    3.   It means for how many years the organization will earn the same amount of profit in the future because of its past efforts.
    4.   It means to profit from the past 10 years.