Practice Test

Q1) S & D share profit and losses equally. They admit C as an equal partner & revalued :Goodwill at Rs.30,000 (book value NIL) .C is to bring in Rs.20,000 as his capital & the necessary cash towards his shares of goodwill. Goodwill account will not remain in the books .what will be the effect of goodwill in the partner's capital account Show Answer

Q2) G, B and V are partners sharing profit and losses equally with a goodwill Rs.1,20,000 shown in the balance sheet & they agreed to take T as an equal partner on the terms that he should bring Rs.1,60,000 as his capital & goodwill ,his share of goodwill was evaluated at Rs.60,000 & the goodwill account is to be written off before admission .What will be the treatment for goodwill ? Show Answer

Q3) B & C share profit & losses in the ratio 3:1. D is admitted to the firm and new profit sharing ratio is 2:1:1..D brings Rs.4,000 as goodwill. The value of goodwill credited will be Show Answer

Q4) A & B are sharing profits in the ratio of 3:1 .according to their partnership deed on reconstitution of a firm , 'goodwill is to be valued at two & half year's purchase of the average profit of the last three completed years .The profit were 2001-02 RS.20,000 ; 2002-2003 Rs.30,000 ; 2003-2004 Rs.40,000 ; 2004-2005 Rs.50,000 ; 2005-2006 Rs.60,000 . 'C ' is admitted for 1/5th share in profit on 31st march ,2006 the amount which C will be required to bring by way of his share of goodwill will be Show Answer

Q5) A and B are partners sharing profit and losses in the ratio 3:2 .they admitted C and agreed to give him 1/4 the of the profit .C contributes Rs.6,000 for capital & the requisite amount of premium in cash. The goodwill of the firm is valued at Rs.9,600.partners withdrew their share of goodwill in cash .A & B withdrew Show Answer

Q6) A and B are partners sharing profit and losses in the ratio 3:2 .they admitted C and agreed to give him 1/4 the of the profit .C acquires 1/6th from A & 1/12 the from B.The goodwill of the firm is valued at Rs.20,160.partners withdrew one half of goodwill .A & B withdrew Show Answer

Q7) A and B are partners sharing profit and losses in the ratio 3:2 .they admitted C and agreed to give him 1/4 the of the profit . A & B. share profit & loss equally .The goodwill of the firm is valued at Rs.9,600.partners withdrew 50% of goodwill .A & B withdrew Show Answer

Q8) A, B & C are partners sharing profit in the ratio of 4:3;2 .D is admitted for 2/9th share of profit & brings Rs.18,000 as his capital & the necessary amount for his share of goodwill. The goodwill of the firm is valued at Rs.2,43,000 .the new profit sharing ratio of A ,B ,C & D will be 3:2:2:2 .the sacrificing partners withdrew half of their share of goodwill .they withdrew Show Answer

Q9) A and B are partners sharing profit and losses in the ratio 3:1 .they admitted C into the firm ,and agreed to give him 1/3 share of the profit . A & B. agreed to share future profit & loss equally .The goodwill of the firm is valued at Rs.27,000..in this case Show Answer

Q10) A , B and C are partners sharing profit and losses in the ratio 3:2:1 .they admitted D into the firm, the New profit sharing ratio between them will be 3:3:2:2 ..The goodwill of the firm is valued at Rs.1,80,000.D brings his share of goodwill in cash. in this case Show Answer

Q11) A , B and C are partners sharing profit and losses in the ratio 3:1:1 .they admitted D into the firm, the New profit sharing ratio between them will be 4:3:2:1 ..The goodwill of the firm is valued at Rs.3,00,000.D brings necessary amount as his share of goodwill . in this case Show Answer

Q12) A & B are partners with the capital of Rs.13,000 & Rs.9,000 respectively. They admit C as a partner with 1/5th share in the profit of the firm .C brings Rs.8,000 as his capital.The amount of goodwill is Show Answer

Q13) A & B are partners with the capital of Rs.3,000 each.They admit C as a partner with 1/4th share in the profit of the firm .C brings Rs.4,800 as his capital.The profit & loss account showed a credit balance of Rs.2,400 as on date of admission of C .The amount of goodwill is Show Answer

Q14) X & Y partners sharing profits in the ratio of 3:1 .they admit Z as a partner who pay Rs.8,000 as goodwill the new profit sharing ratio being 2:1:1 among X ,Y & Z respectively .the amount of goodwill be credited to Show Answer

Q15) A and B are partners with their capital Rs.1,00,000 & Rs.80,000 respectively. they share profit & loss equally .they admitted C & he contributes Rs.50,000 as his capital, nothing in goodwill .goodwill in the B/s Rs.40,000 is revalued as Rs.70,000 .what is the goodwill after C 's admission Show Answer

Q16) A ,B & C are equal partners .D is admitted to the firm for 1/4th share .D brings Rs.40,000 capital & Rs.10,000 being half of the premium for goodwill. the value of goodwill of the firm is Show Answer

Q17) A and B are partners sharing profit and losses equally. They admitted C as a equal partner & goodwill is valued as Rs.60,000 (book value NIL).C would pay Rs.40,000 as his capital, and necessary goodwill as cash towards his share of goodwill. goodwill will remain in the books .what will be the final effect of goodwill in the partners capital account ? Show Answer

Q18) X & Y partners sharing profits in the ratio of 2:1 .they admit Z as a partner who pay Rs.9,000 as goodwill the new profit sharing ratio being 3:2:1 among X ,Y & Z respectively .the amount of goodwill will be Show Answer

Q19) A and B are partners with their capital Rs.20,000 & Rs.40,000 respectively. they share profit & loss equally .they admitted C for 1/4th profit of the firm on the payment of Rs.24,000.the amount of hidden goodwill is Show Answer

Q20) A and B shares profit and losses equally. They have Rs. 20,000 each as Capital. They admit C as equal partner and Goodwill was valued as Rs.3,000. C is to bring Rs.30,000 as his Capital and necessary cash towards his share of Goodwill. Goodwill A/c will not be remain open in books. If profit on revaluation is Rs. 13,000, find Closing balance of Capital Accounts. Show Answer

Q21) When the incoming Partner being his share of Goodwill in cash, which of these methods of valuation of Goodwill is appropriate - Show Answer

Q22) When Goodwill is revalued at the time of admission of a Partners, how Goodwill is distributed amongst the old Partners - Show Answer

Q23) Goodwill brought in by incoming Partners in cash is taken away by the old Partners in - Show Answer

Q24) At the time of admission when Goodwill A/c is not being opened in the books of account, credit is given to old Partner in what ratio ? Show Answer

Q25) Account which is debited when new Partner brings cash for his share of Goodwill - Show Answer

Q26) When the incoming Partner brings his share of Goodwill in cash, it is adjusted by crediting to - Show Answer

Q27) When the incoming Partners does not being his part of Goodwill in cash which Account should be debited ? Show Answer

Q28) If the incoming Partner brings his share of Goodwill in cash and it is further decided to shown Goodwill at Rs.5,000 in books of accounts, then the amount required to be shown in the new Balance Sheet will be raised in - Show Answer

Q29) If the incoming Partners is to brings his share of Goodwill in cash, and there exists any balance in Goodwill A/c, then this Goodwill A/c is to be written off among old Partners in - Show Answer

Q30) When Goodwill is to written off after the admission of a partner in which ratio it is transferred to capital A/c of the Partners ? Show Answer

Q31) Goodwill of a Firm is Rs. 15,000. C is admission for 1/4th share of profit. What is his share of Goodwill ? Show Answer

Q32) C is admitted in a Firm for 1/4th share in the profits for which he bring Rs. 3,000 for Goodwill. It will be taken by the old Partners in - Show Answer

Q33) X and Y are Partners in a Firm with Capital of Rs. 18,000 and Rs. 20,000. Z was admitted for 1/3 rd share in profit and bring Rs. 24,000 as Capital, calculate the amount goodwill : Show Answer

Q34) X and Y share profit and losses in the ratio of 2:1 they take Z as a Partner and the new profit sharing ratio becomes 3:2:1. Z brings Rs. 5,000 as premium for Goodwill. The full value of Goodwill be - Show Answer

Q35) X and Y Partners with Capital of Rs.9,000 and Rs. 10,000 respectively. Z is admitted into the Firm into the Firm for 1/3rd share of profit and he brings Rs.12,000 as hi share of Capital. How much will be the Goodwill of the Firm ? Show Answer

Q36) X and Y are Partners sharing profit in the ratio of 1:1. They admit Z for 1/5th share who contributed Rs.25,000 for his share of Goodwill. The total of the Goodwill of the Firm will be ? Show Answer

Q37) A and B are Partners with the Capital Rs.50,000 and Rs.40,000 respectively. They share profits and losses equally. C is admitted on bringing Rs.50,000 as Capital only and nothing was brought against Goodwill. Goodwill appearing in Balance sheet at Rs.10,000 is revalued as Rs. 30,000. What will be value of Goodwill in the books after the admission of C ? Show Answer

Q38) A and B are Partners with capitals of Rs.10,000 and Rs. 20,000 respectively and sharing profit equally. They admitted C as their third partners for 1/4th share for all purpose on payment of Rs.15,000. The amount of hidden Goodwill is - Show Answer

Q39) H, K and R are equal Partners. D is admitted to the Firm for 1/4th share. D bring Rs. 20,000 Capital and Rs.5,000 being half of the premium of Goodwill. The value of Goodwill to the Firm is - Show Answer

Q40) A and B are Partners with Capital of Rs.5,000 each. They admit C as a Partner with 1/4th share in the profit of the firm . C brings Rs.8,000 as his share of Capital. The Profit and Loss A/c showed a credit balance of Rs.4,000 as on date of admission of C. Goodwill is equal to - Show Answer

Q41) A,B,C are Partners sharing profits in the ratio of 4:3:2. D is admitted for 2/9th share of profits and brings Rs.30,000 as Debits and Rs.10,000 for his share of Goodwill. The new Profit sharing ratio between Partners will be 3:2::2:2. Goodwill amount will be credited in the Capital account of - Show Answer

Q42) X and Y are Partners sharing profits in the ratio of 3:1. They admit Z as a Partners who pays Rs.4,000 as Goodwill. The new profit Sharing ratio being 2:1:1. amount X,Y,Z. The amount of Goodwill will be credited to - Show Answer

Q43) A and B are Partners sharing the profit in the ratio of 4:1. They take C as the new partner who is Supposed to bring Rs.25,000 as Capital and Rs. 10,000 as Goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. Show the treatment in the Firm's books. Show Answer

Q44) A,B and C were equal Partners of a Firm with Goodwill Rs. 10,000 shown in the Balance Sheet. They agree to take Das an equal Partner on the term that he should share of Goodwill was evaluated at Rs.40,000. Goodwill A/c is to be written off before admission. What is the treatment for Goodwill? Show Answer

Q45) A and B are Partners sharing the profit in the ratio of 3:2. They take C as the New Partner who is supposed to bring Rs.50,000 against Capital and Rs.20,000 against Goodwill. new profit sharing ratio is 1:1:1. C is able to bring Rs.60,000 only. How this will be treated in the books of the Firm ? Show Answer

Q46) Consequent upon admission of a partner in a Firm Goodwill is valued at Rs.60,000. But there exist a Goodwill A/c in the Balance Sheet which stood at Rs.48,000. What would be treatment of Goodwill at the time of admission of a new Partner if the Firm follows revaluation method o Goodwill ? Show Answer

Q47) A,B and C are Partners in a Business firm sharing their profit in the ratio of 4:3:2. A new Partner D enters the Firm. The new profit sharing ratio is A,B,C and D is 5:4:2:1.D contributed Goodwill of Rs.36,000. This Goodwill is to be allocated what will be the correct allocation? Show Answer

Q48) X and Y are Partners sharing profits in the ratio of 3:1. They admit Z as a Partner who paid Rs.40,000 as Goodwill. The new profit sharing ratio being 2:1:1 among X,Y and Z respectively. The amount of Goodwill will be credited to - Show Answer

Q49) R, admitted as a new Partner for 1/4th share of future profits, fails to bring in cash of Rs.5,000 towards Goodwill but the existing (old) Partners S and T, sharing profit in the ratio of 3:2, raise the Goodwill A/c at its full value. Therefore, the Partners will be credited for Goodwill as - Show Answer

Q50) R , J & D are partners sharing profit and losses in the ratio 7:5:4. D died on 30.06.2006.It was decided to value the goodwill on the basis of 3 year's purchase of last 5 years avg. profit .if the profits are Rs.29,600:Rs.28,700 ; Rs.28,900 ;Rs.24,000 & Rs.26,800.What will be D's share of goodwill ? Show Answer

Q51) If A , B and C are partners sharing profit and losses in the ratio 5:3:2 ,.then on the death of A,how much B & C will pay to A's executer on account of goodwill .Goodwill is to be calculated on the basis of 2 year's purchase of last 3 years avg. profit .if the profits are Rs.3,29,000:Rs.3,46,000 ; Rs.4,05,000 Show Answer

Q52) When Goodwill is revalued at the time of admission of a Partner, how Goodwill is distributed amongst the old Partners - Show Answer

Q53) Account which is debited when new Partner brings cash for share of Goodwill - Show Answer

Q54) When the incoming Partners brings his share of Goodwill in cash, it is adjusted by crediting to - Show Answer

Q55) When goodwill is paid privately, no entry in the books of a/c is required. Show Answer

Q56) If the goodwill account is raised up, goodwill account is debited. Show Answer

Q57) When goodwill is written off, goodwill amount is debited to all partners capital account in new ratio. Show Answer

Q58) On admission of a partner, the amount of goodwill brought in cash is credited to goodwill account. Show Answer

Q59) Goodwill is a tangible asset of the business. Show Answer

Q60) Amount of goodwill contributed by the new partner is credited to capital account of the old partner in their new ratio. Show Answer

Q61) When goodwill is withdrawn by the old partner in cash goodwill account is credited. Show Answer

Q62) If Goodwill A/c is written off from the books of the firm only old partners capital A/c are debited in the old ratio. Show Answer

Q63) When new partner does not bring cash for goodwill, the goodwill is raised in the books of the new firm. Show Answer

Q64) Which of the following factor generally contribute to the value of goodwill of a firm ? Show Answer

Q65) Which of the following factor generally contribute to the value of goodwill of a firm ? Show Answer

Q66) In which of the following case the need for the valuation of goodwill in a firm may arise ? Show Answer

Q67) Which of the following formula is used to calculate goodwill under simple average profit method ? Show Answer

Q68) Which of the following formula is used to calculate goodwill under weighted average profit method ? Show Answer

Q69) Which of the following formula is/are used for valuation goodwill under super profit basis ? Show Answer

Q70) The profits of last 5 years Rs.60,000,Rs.67,500,Rs.52,500,Rs.75,000,Rs.60,000.Find the value of goodwill,If it is calculated on average profits of last 5 years on the basis of 3 years of purchase Show Answer

Q71) On 1st April,2011 on the admission of a new partner,it is a agreed that goodwill of the firm is valued at 3 years purchase of average profits for the lase 5 years.The profits for last 5 years have been as follows. Year ended Profit/Loss 31-3-2011 16,110 31-03-2012 11,850 31-03-2013 8,145 31-03-2014 (600) 31-03-2015 12,750 value of goodwill will be___ Show Answer

Q72) On 1st April,2011 on the admission of a new partner,it is a agreed that goodwill of the firm is valued at 2 years purchase of weighted average profits for the lase 3 years.The profits for last 3 years have been as follows. Year ended Profits Weight 31-03-2011 45,000 1 31-03-2012 52,500 2 31-03-2013 72,000 3 Value of goodwill will be_______ Show Answer

Q73) Find the goodwill from the following information: Capital employed - RS.11,00,000 Rate of normal return - Rs.10% Future maintainable profit - Rs.2,00,000 No.of year purchase - 3 years Show Answer

Q74) Find the goodwill of the firm using capitalization method from the following information: Total capital employed in the firm Rs.4,80,000.Rate of normal return-15%.Profit for the year Rs.90,000 Show Answer

Q75) A firm of X,Y and Z has a total capital investment of Rs.3,60,000.The firm earned net profit during the last year as Rs.56,000,Rs.64,000,Rs 96,000 and Rs.80,000.The fair return on the net capital employed is 15%. Value of goodwill if it is based on 3 year's purchase of the average super profit of past four years. Show Answer

Q76) Find goodwill from the following information:Capital employed -Rs.8,25,000.Rate of normal return-10%.Future maintainable profit-Rs.1,50,000.Annuity factor-Rs.3.17 Show Answer

Q77) The net profit after tax of Z & Co.for the past 5 years are as follows.Year Profit 2007-2008 2,56,0002008-2009 2,64,0002009-2010 3,76,0002010-2011 4,86,0002011-2012 5,30,500The capital employed is Rs.16,00,000.Rate of normal return is 15%.Calculate the value of the good will on the basis of annuity method on super profit basis,taking the present value of an anuuity of Re.1 for the 4 years at 15% as Rs.2.855. Show Answer

Q78) The net profit after tax of NZ&Co. for the past 5 years are as follows Year Profit2010-2011 20,0002011-2012 2,61,0002012-2013 3,12,000Closing stock for 2011-2012 and 2012-2013 includes the defective items of Rs.22,000 and Rs.62,000 respectively which were considered as having no market value.Calculate goodwill on average profit method. Show Answer

Q79) From the following information calculate the value of goodwill. The adjusted forecast maintainable profit is Rs.40,000,Capital employed is Rs.2,00,000,Normal rate of return is 15%,Capitalization rate is 20%. Show Answer

Q80) The net profits of a business,after providing for income tax for the last 5 years were: Rs.80,000,Rs.1,00,000,Rs.1,20,000,Rs.1,25,000 and Rs.2,00,000 respectively.The capital employed in the business is Rs.10,00,000 and the normal rate of return is 10%.calculate the value of the goodwill on the basis of the annuity method taking the present value of annuity of Re.1 for 5 years at 10% is 3.7907 Show Answer

Q81) Capital employed by a partnership firm is Rs.1,00,000.Its average profit is Rs.20,000.Normal rate of return is 15%. Value of goodwill by capitalization method is Show Answer

Q82) The profit and losses for the last years are: Year Profit 2001-2002 (20,000) 2002-2003 (5,000) 2003-2004 1,96,000 2004-2005 1,52,000 The average capital employed in the business is Rs.4,00,000.The rate of interest expected from capital invested is 12%.The remuneration of partners is estimated to be Rs.2,000 P.m.not charged in the above losses/profit.Calculate the value of good will on the basis of 2 years purchase of super profit based on the average of four years. Show Answer

Q83) H and M are partners in a firm sharing profits and losses in the ratio of 3:2.Their capitals are Rs.90,000 and Rs.60,000 respectively.They admit k as new partner who will get 1/6th share in the profits of the firm.K bring in Rs.37,500 as his share capital.Calculate hidden goodwill ? Show Answer

Q84) A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings Rs.70,000 cash and Rs.48,000 against goodwill. New profit sharing ratio between A,B and C are 7:5:4. Find the sacrificing ratio of A:B. Show Answer

Q85) Following are the factors affecting goodwill except: Show Answer

Q86) Weighted average method of calculating goodwill should be followed when: Show Answer

Q87) In the absence of any provision in the partnership agreement, profits and losses are shared Show Answer