12th Class Accountancy Goodwill Question Bank

done Assertion and Reason - Goodwill : Nature And Valuation Total Questions - 5

• question_answer1)

  Assertion [A] :

  Goodwill is an intangible asset but not a fictitious asset.

  Reason [R] :

  Goodwill does not have physical existence. Fictitious assets are not realizable whereas goodwill can be purchased or sold.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Both Assertion and Reason are not correct done clear
  D)
  Reason is correct but Assertion is not correct done clear
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• question_answer2)

  Assertion [A] :

  Goodwill is shown in the books of accounts only when it is purchased. Self-generated Goodwill is not recorded in the books of accounts.

  Reason [R] :

  Accounting Standard-26 (AS 26) prescribes that goodwill should not be recognized in the books of accounts unless some money or money's worth is paid for it,

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Both Assertion and Reason are not correct done clear
  D)
  Reason is correct but Assertion is not correct done clear
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• question_answer3)

  Assertion [A] :

  Better quality of product/service and after sale services. Good customer relations will lead to customer satisfaction, which will increase the sales and profits.

  Reason [R] :

  Higher Profits will lead to higher value of goodwill of the enterprise.

  Choose the Correct Option from the following:

   
  A)
  Assertion and Reason both are correct if viewed together in context of goodwill. done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Both Assertion and Reason are not correct done clear
  D)
  Only Assertion is correct done clear
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• question_answer4)

  Assertion [A]:

  When a new partner joins the partnership business, the goodwill of the firm is calculated to find his share of premium for goodwill.

  Reason [R]:

  Goodwill can be valued any time by using Average Profit Method, Super Profit Method and Capitalisation Method.

  It can be calculated at the end of every year by taking profit of that year.

  Choose the Correct Option from the following:

   
  A)
  Assertion and Reason both are correct if viewed together in context of goodwill. done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Both Assertion and Reason are not correct done clear
  D)
  Only Assertion is correct done clear
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• question_answer5)

  Assertion [A] :

  While calculating capital employed for the purpose of goodwill calculation, the following assets are not included :

  (i) Non-Trade Investment

  (ii) Capital Work in Progress (building under construction and may take 2-3 years for completion)

  (iii) Intangible assets under development (software under development may take 2 more years)

  (iv) Advance paid for the purchase of assets

  Reason [R] :

  Assets which do not contribute in the firm to carry on business or in the operation of the business, should not be considered for the calculation of capital employed.

  Choose the Correct Option from the following:

   
  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Both Assertion and Reason are not correct done clear
  D)
  Only Assertion is correct done clear
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