Valuation of goodwill
Quiz by Sushila Yadav
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- Q1What is goodwill?An intangible asset that represents the reputation and brand value of a company.The amount a company pays to acquire another company.The amount of money a company receives from its customers.The difference between the book value and fair market value of a company.A physical asset like machinery or equipment.30s
- Q2What is the purpose of valuing goodwill?To determine the revenue generated by a company.To determine the fair value of a company for financial reporting and decision-making purposes.To evaluate the market share of a company.To calculate the total assets of a company.To assess the profitability of a company.30s
- Q3What is the Goodwill average profit method?A method used to determine the value of a business based on the average profit it generates.A method used to calculate the total revenue of a business based on its previous sales.A method used to determine the value of a business based on its total assets.A method used to calculate the total expenses of a business based on its previous financial statements.30s
- Q4What is the formula for calculating Goodwill using the average profit method?Goodwill = Average Profit + Number of years purchasesGoodwill = Average Profit x Number of years purchasesGoodwill = Average Profit / Number of years purchasesGoodwill = Average Profit - Number of years purchases30s
- Q5Which of the following is true about the Goodwill average profit method?It considers the future earning potential of a business.It only considers the historical profit of a business.It only considers the total assets of a business.It only considers the current market value of a business.30s
- Q6
Goodwill is defined as
Intangible asset
Liquid asset
Fictitious asset
Current asset
30s - Q7
The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 12,00,000. The value of goodwill of the company as per the capitalisation method will be
A) ₹ 82,00,000
B) ₹ 12,00,000
C) ₹ 72,00,000
D) ₹ 42,00,000
D
C
A
B
30s - Q8
The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called
Super Profit
Surplus
Goodwill
Reserve
30s - Q9
A firm’s goodwill is not affected by
Location of the firm
None of the Above
The reputation of the Firm
Better Customer Service
30s - Q10
Weighted average method of calculating goodwill is used when
None of the Above
Profits are Fluctuating
Profits are not equal
Profits show an increasing or decreasing trend
30s - Q11
When there is a change in the current partners’ association that results in ending the existing agreement and initiate a formation of a new agreement is known as
A) Revaluation of Partnership
B) Reconstitution of Partnership
C) Realisation of Partnership
D) None of the Above
C
B
A
D
30s - Q12
A firm earns ₹1,00,000. The normal rate of return is 10%. The assets of the company amounted to ₹11,00,000 and liabilities to ₹1,00,000. Value of goodwill by the capitalisation of average actual profit will be
A) ₹ 2,00,000
B) ₹ 10,000
C) ₹ 5,000
D) ₹ 1,00,000
D
A
B
C
30s - Q13
Which of the following is True in relation to Goodwill
Goodwill is a fictitious asset
Goodwill is a current asset
Goodwill is an intangible asset
Goodwill is awasting asset
30s - Q14
The excess amount which the firm can get on selling its assets over and above the saleable value of its assets called.
Super profits
Goodwill.
Reserve
Surplus
30s - Q1530s