Goodwill is Also Known As’ MCQ for Class 12 Accountancy Exams

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Goodwill is Also Known As’ MCQ: Goodwill is an intangible asset associated with one company’s acquisition of another. It represents the amount paid beyond the net fair value of the tangible and intangible assets acquired. Goodwill reflects factors like a strong brand name, a loyal customer base, and excellent employee relations. It also includes aspects such as patents and proprietary technology. Understanding goodwill is crucial for analyzing the value of a business in acquisitions.

Goodwill is Also Known As

Goodwill is also known as acquisition premium, as it is the extra amount paid over the fair value of acquired assets. Another term for goodwill is business value, highlighting the overall worth of a company’s reputation and relationships. Understanding these terms can help in grasping the concept of goodwill better.

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Goodwill is Also Known As’ MCQ

“Goodwill is Also Known As” MCQs are designed based on the latest CBSE syllabus. These questions help students understand different terms related to goodwill. For instance, goodwill is also known as an intangible asset, acquisition premium, or business value. These MCQs test students’ knowledge of these terms and their meanings. Practicing these questions is crucial for mastering the concept of goodwill and excelling in exams.

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Goodwill is Also Known As’ MCQ with Answers

1. What is another term for goodwill in accounting?
A. Brand Value
B. Intangible Asset
C. Trade Discount
D. Depreciation
Answer: B. Intangible Asset

2. Goodwill is also referred to as:
A. Financial Capital
B. Proprietorship Capital
C. Acquired Advantage
D. Legal Claim
Answer: C. Acquired Advantage

3. What is another name for goodwill in the context of business valuation?
A. Corporate Equity
B. Business Premium
C. Trade Name
D. Tangible Asset
Answer: B. Business Premium

5. Which term is synonymous with goodwill in accounting?
A. Fixed Asset
B. Capital Reserve
C. Purchase Consideration
D. Inventory
Answer: C. Purchase Consideration

6. What is the alternative name for goodwill that reflects its intangible nature?
A. Physical Asset
B. Intellectual Property
C. Non-Physical Asset
D. Current Asset
Answer: C. Non-Physical Asset

7. What is another way to refer to goodwill in a business?
A. Equity
B. Commercial Value
C. Leasehold Improvement
D. Loan Liability
Answer: B. Commercial Value

MCQs On Valuation Of Shares And Goodwill

1. Which method is commonly used to calculate goodwill in a partnership firm when a new partner is admitted?
A. Average Profit Method
B. Capitalization of Profit Method
C. Super Profit Method
D. Revaluation Method
Answer: C. Super Profit Method

2. Which of the following methods is based on the average profit of the firm?
A. Capitalization of Super Profits Method
B. Average Profit Method
C. Market Value Method
D. Discounted Cash Flow Method
Answer: B. Average Profit Method

3. Goodwill is considered as which type of asset in the books of accounts?
A. Fixed Asset
B. Intangible Asset
C. Current Asset
D. Liability
Answer: B. Intangible Asset

4. In which method of calculating goodwill is the future maintainable profit considered?
A. Average Profit Method
B. Super Profit Method
C. Capitalization of Profits Method
D. Formula Method
Answer: C. Capitalization of Profits Method

5. What does the term ‘goodwill’ represent in partnership firm accounts?
A. Legal Rights
B. Physical Assets
C. Non-Tangible Value
D. Financial Investments
Answer: C. Non-Tangible Value

6. Which formula is used to calculate goodwill using the Super Profit Method?
A. Goodwill = (Average Profit × No. of Years) – Capital Employed
B. Goodwill = Super Profit × Number of Years’ Purchase
C. Goodwill = Average Profit × Rate of Capitalization
D. Goodwill = Future Maintainable Profit × Discount Factor
Answer: B. Goodwill = Super Profit × Number of Years’ Purchase

7. Which of the following methods requires the adjustment of profits to account for the market conditions?
A. Average Profit Method
B. Capitalization of Profits Method
C. Super Profit Method
D. Valuation Method
Answer: B. Capitalization of Profits Method

8. In which method of goodwill valuation are the current year’s profits adjusted for abnormal items?
A. Average Profit Method
B. Super Profit Method
C. Capitalization of Profits Method
D. Weighted Average Profit Method
Answer: A. Average Profit Method

9. When calculating goodwill, what is the ‘number of years’ purchase’ typically used for?
A. To calculate fixed assets
B. To determine the goodwill amount
C. To allocate profits among partners
D. To calculate depreciation
Answer: B. To determine the goodwill amount

10. Which method of calculating goodwill involves assessing the value of existing partnerships based on expected future profits?
A. Revaluation Method
B. Super Profit Method
C. Average Profit Method
D. Capitalization of Profits Method
Answer: D. Capitalization of Profits Method