Under the capitalization of super profit method, goodwill is calculated as: MCQ with Answer and Explanation

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Under the capitalization of super profit method, goodwill is calculated as:

A. Super Profit / Normal Rate of Return

B. Average Profit / Normal Rate of Return

C. Super Profit * Number of Years Purchase

D. Capital Employed - Super Profit

Answer: Option A

Solution (By JKSSB Mock Tests)

Capitalization of super profit determines the capital value of the excess profits by dividing Super Profit by the Normal Rate of Return.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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The 'Actuarial Gains and Losses' on defined benefit plans are recognised in:

A. Balance sheet

B. Deferred over period

C. Other Comprehensive Income (OCI) and not reclassified to profit or loss

D. Profit or loss immediately

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Correct Answer: Option C

Explanation:
Ind AS 19 requires actuarial gains/losses to be recognised in OCI.

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Question #2

When a bill is dishonoured, the drawer records:

A. Debit sales, credit bank

B. Debit drawee, credit bank

C. No entry

D. Debit bank, credit drawee

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Correct Answer: Option B

Explanation:
On dishonour, drawee's account is debited (debtor again), and bank is credited as bank returns the bill.

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Question #3

The 'Peer Review' of audit firms is conducted by:

A. SEBI

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Correct Answer: Option C

Explanation:
ICAI has a Peer Review Board to ensure quality of audit services.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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