CBSE Class 12 Accountancy Goodwill Nature And Valuation Worksheet Set A

1 Goodwill is __________

Question. Goodwill is _____
(a) tangible asset
(b) intangible asset
(c) fictitious asset
(d) both (b) & (c)
Answer: B

Question. Goodwill of the firm on the basis of 2 years' purchase of average profit of the last 3 years is Rs. 25,000. Find average profit.
(a) Rs. 50,000
(b) Rs. 25,000
(c) Rs. 10,000
(d) Rs. 2500
Answer: D

Question. Calculate the value of goodwill at 3 years' purchase when: Capital employed Rs. 2,50,000; Average profit Rs. 30,000 and normal rate of return is I0%.
(a) Rs. 3000
(b) Rs. 25,000
(c) Rs. 30,000
(d) Rs. 5,000
Answer: D

Question. What are super profits
(a) Actual profit – Normal Profit
(b) Normal Profit - Actual profit
(c) Actual profit + Normal Profit
(d) None of the above
Answer: A

Question. The net assets of the firm including fictitious assets of 5,000 are 85,000.The net liabilities of the firm are 30,000.The normal rate of return is 10% and the average profits of the firm are 8,000.Calculate the goodwill as per capitalization of super profits.
(a) Rs.20,000
(b) Rs. 30,000
(c) Rs. 25,000
(d) None of the above
Answer: B

Question. Which of the following items are added to previous year’s profits for finding normal profits for valuation of goodwill.?
(a) Loss on sale of fixed assets
(b) Loss due to fire, earthquake etc
(c) Undervaluation of closing stock
(d) All of the above
Answer: D

Question. Under which method of valuation of goodwill, normal rate of return is not considered?
(a) Average profit method
(b) Super profit method
(c) Capitalisation method
(d) None of these
Answer: C

Question. Following are the methods of calculating goodwill except:
(a) Super profit method
(b) Average profit method
(c) Weighted Average profit method
(d) Capital profit method
Answer: D

Question. The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called :
(a) Surplus
(b) Super profits
(c) Reserve
(d) Goodwill
Answer: D

Question. When Goodwill is not purchased goodwill account can :
(a) Never be raised in the books
(b) Be raised in the books
(c) Be partially raised in the books
(d) Be raised as per the agreement of the partners
Answer: A

Question. The goodwill of the firm is not affected by:
(a) Location of the firm
(b) reputation of the firm
(c) Better customer services
(d) None of the above
Answer: B

Question. Weighted average profit method of calculating goodwill is used when:
(a) Profits are not equal
(b) Profits show a trend
(c) Profits are fluctuating
(d) None of the above
Answer: B

Question. Capital invested in a firm is 5,00,000.Normal rate of return is 10% .Average profit of the firm are 64,000(after an abnormal loss of 4,000).Value of goodwill at four times the super profits will be:
(a) Rs.72,000
(b) Rs. 40,000
(c) Rs. 2,40,000
(d) Rs. 1,80,000
Answer: A

Question. Under ---------- method ,goodwill is the excess of capitalized value of business over actual capital employed.
Answer: Capitalisation of average profit

Question. The value of goodwill is based on ----------- judgment of the valuer .
Answer: Subjective

Question. When the value of goodwill of the firm is not given but has to be inferred on the basis of the net worth of the firm ,it is called……………..
Answer: Hidden goodwill

Question. Goodwill is not valued during ………….
Answer: Dissolution of the firm

Question. If Super profit of a firm is 10,000,its value of goodwill will be ………….if rate of return is 8%
Answer: 1,25,000

State true or false

Question. Location of business does not affect the goodwill of business.
Answer: False

Question. “Average profit method” takes into consideration the future maintainable profits.
Answer: True

Question. Goodwill can be sold in part.
Answer: False

Question. Purchased goodwill may arise on acquisition of an existing business concern.
Answer: True

Question. Self-Generated goodwill is recorded in the books of accounts as some consideration is paid for it
Answer: False

Question. Goodwill is a fictitious asset
Answer: False

Question. Goodwill is valued during dissolution of a firm
Answer: False

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