Goodwill In Partnership Accounts Model Question Paper

12th Standard EM

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Accountancy

Time : 01:00:00 Hrs
Total Marks : 50
    5 x 1 = 5
  1. Super profit is the difference between

    (a)

    Capital employed and average profit

    (b)

    Assets and liabilities

    (c)

    Average profit and normal profit

    (d)

    Current year’s profit and average profit

  2. Book profit of 2017 is Rs.35,000; non-recurring income included in the profit is Rs.1,000 and abnormal loss charged in the year 2017 was Rs.2,000, then the adjusted profit is

    (a)

    Rs.36,000

    (b)

    Rs.35,000

    (c)

    Rs.38,000

    (d)

    Rs.34,000

  3. The total capitalised value of a business is Rs.1,00,000; assets are Rs.1,50,000 and liabilities are Rs.80,000. The value of goodwill as per the capitalisation method will be

    (a)

    Rs.40,000

    (b)

    Rs.70,000

    (c)

    Rs.1,00,000

    (d)

    Rs.30,000

  4. Goodwill is shown under fixed assets in the

    (a)

    Trial balance

    (b)

    Balance sheet

    (c)

    Trading account

    (d)

    Profit and loss account

  5. The monetary value of such advantage is termed as

    (a)

    Goodwill

    (b)

    Bank overdraft

    (c)

    Capital

    (d)

    Cash

  6. 5 x 2 = 10
  7. From the following information, find out the value of goodwill by capitalisation method:
    (a) Average profit = Rs.60,000
    (b) Normal rate of return = 10%
    (c) Capital employed = Rs.4,50,000

  8. The following are the profits of a firm in the last five years:
    2014: Rs.10,000; 2015: Rs.11,000; 2016: Rs.12,000; 2017: Rs.13,000 and 2018: Rs.14,000
    Calculate the value of goodwill at 2 years purchase of average profit of five years.

  9. What is normal rate of return?

  10. Why is goodwill considered as an intangible asset but not a fictitious assets?

  11. How does the factor's 'quality of product' affect the goodwill of a firm?

  12. 5 x 3 = 15
  13. The following particulars are available in respect of a business carried on by a partnership firm:
    (a) Profits earned: 2016: Rs.30,000; 2017: Rs.29,000 and 2018: Rs.32,000.
    (b) Profit of 2016 includes a non-recurring income of Rs.3,000.
    (c) Profit of 2017 is reduced by Rs.2,000 due to stock destroyed by fire.
    (d) The stock is not insured. But, it is decided to insure the stock in future. The insurance premium is estimated at Rs.5,600 per annum.
    You are required to calculate the value of goodwill on the basis of 2 years purchase of average profits of the last three years.

  14. For the purpose of admitting a new partner, a firm has decided to value its goodwill at 3 years purchase of the average profit of the last 4 years using weighted average method. Profits of the past 4 years and the respective weights are as follows:

    Particulars 2015 2016 2017 2018
    Profit (Rs.) 20,000 22,000 24,000 28,000
    Weight 1 2 3 4

    Compute the value of goodwill.

  15. From the following information relating to a partnership firm, find out the value of its goodwill based on 3 years purchase of average profits of the last 4 years:
    (a) Profits of the years 2015, 2016, 2017 and 2018 are Rs.10,000, Rs.12,500, Rs.12,000 and
    Rs.11,500 respectively.
    (b) The business was looked after by a partner and his fair remuneration amounts to Rs.1,500
    per year. This amount was not considered in the calculation of the above profits.

  16. Explain the classification of goodwill.

  17. How is goodwill calculated under the weighted average profit method?

  18. 4 x 5 = 20
  19. A partnership firm earned net profits during the last three years as follows:
    2016 : Rs.20,000; 2017 : Rs.17,000 and 2018 : Rs.23,000
    The capital investment of the firm throughout the above mentioned period has been Rs.80,000. Having regard to the risk involved, 15% is considered to be a fair return on capital employed
    in the business. Calculate the value of goodwill on the basis of 2 years purchase of super profit.

  20. A partnership firm has decided to value its goodwill for the purpose of setting a retiring Partner. The profit of that firm for the last four years were as follows:
    2015 : Rs.20,000; 2016 : Rs.25,000; 2017; Rs.24,000 and 2018: Rs.23,000
    The business was looked after by a partner. No remuneration was paid to him. The fair remuneration of the partner valued at comes to Rs. 3,000 per annum.
    Find out the value of goodwill, if it is valued on the basis of three years purchase of the average profit of the last four years.

  21. From the following information relating to Arul enterprises, calculate the value of goodwill on the basis of 2 years purchase of the average profits of 3 years.
    (a) Profits for the years ending 31st December 2016, 2017 and 201S were Rs. 23,000 Rs.22,000 and Rs. 25,000
    respectively.
    (b) A non - recurring income of Rs. 2,500 is included in the profits of the year 2016.
    (c) The closing stock of the year 2017 was overvalued by Rs. 5,000.

  22. From the following information, compute the value of goodwill as per annuity method:
    (a) Capital employed: Rs.1,00,000
    (b) Normal rate of return: 15%
    (c) Profit of the years 2016, 2017 and 2018 were n6,000, n8,000 and Rs. 20,000 respectively
    (d) The present value of annuity of n for 3 years at 10% is 2.4868

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