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. Average Profit / Normal Rate of Return

B. Super Profit * Number of Years Purchase

C. Super Profit / Normal Rate of Return

D. Capital Employed - Super Profit

Answer: Option C

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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'Prepaid Expenses' are shown as:

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B. Income

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Correct Answer: Option D

Explanation:
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Question #2

The 'Deferred Revenue Expenditure' is an expenditure that:

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Correct Answer: Option A

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Question #3

The 'Concept of OCI' (Other Comprehensive Income) was introduced to:

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Correct Answer: Option C

Explanation:
OCI captures unrealised gains/losses and re-measurements not routed through P&L.

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