Under the 'Net Profit Method' of goodwill valuation, goodwill is: MCQ with Answer and Explanation

Question

Share Report Error

Under the 'Net Profit Method' of goodwill valuation, goodwill is:

A. Number of years purchase of super profits

B. Number of years purchase of average profits

C. Capitalised value of super profits

D. Capitalised value of average profits less net tangible assets

Answer: Option B

Solution (By JKSSB Mock Tests)

The net profit method uses a multiplier on average profits, not super profits. Capitalisation of super profits is different.

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

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Accountancy and Book Keeping Questions

Question #1

In a common size income statement, all items are expressed as a percentage of:

A. Gross profit

B. Net profit

C. Total assets

D. Revenue from operations (net sales)

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
Common size income statement base is net sales/revenue from operations.

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

Question #2

The 'Section 115BAC' relates to:

A. Tax on dividends

B. Alternate Minimum Tax

C. New tax regime for individuals and HUFs

D. Minimum Alternate Tax

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
Section 115BAC provides the concessional tax regime for individuals/HUFs.

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

Question #3

A firm's capital is ₹3,00,000, outside liabilities ₹1,50,000. Total assets will be:

A. ₹4,50,000

B. ₹1,00,000

C. ₹1,50,000

D. ₹3,00,000

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Total Assets = Capital + Liabilities = ₹3,00,000 + ₹1,50,000 = ₹4,50,000.

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

Explore All Accountancy and Book Keeping MCQs