Under the Super Profit method, Goodwill is calculated as: MCQ with Answer and Explanation

Under the Super Profit method, Goodwill is calculated as:
A. Super Profit / Normal Rate of Return
B. Average Profit x Number of years' purchase
C. Capital Employed x Normal Rate of Return
D. Super Profit x Number of years' purchase
Answer: Option D
Solution (By JKSSB Mock Tests)
Super profit is the excess of actual average profit over normal profit. Goodwill is Super Profit multiplied by the agreed number of years' purchase.

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Practice More Accountancy and Book Keeping Questions

Question #1
If a business purchases land for Rs 10 lakhs and its market value increases to Rs 15 lakhs, it is still recorded at Rs 10 lakhs due to:
A. Dual Aspect Concept
B. Money Measurement Concept
C. Going Concern Concept
D. Cost Concept

Correct Answer: Option D


Explanation:
The Cost Concept (Historical Cost) requires assets to be recorded at their original purchase price, ignoring subsequent market value fluctuations.

Question #2
The 'Companies Act, 2013' mandates CSR spending for companies with:
A. Net worth ≥ ₹500 crore, or turnover ≥ ₹1,000 crore, or net profit ≥ ₹5 crore
B. Only listed companies
C. All companies
D. No mandate

Correct Answer: Option A


Explanation:
Section 135 specifies the criteria for mandatory CSR.

Question #3
The 'Other Matter' paragraph refers to:
A. Matters other than those presented or disclosed in the financial statements that are relevant to understanding the audit, auditor's responsibilities, or report
B. Qualification
C. Matters already disclosed in financial statements
D. Adverse opinion

Correct Answer: Option A


Explanation:
Other Matter deals with matters not in the financial statements.