Match the following in accordance with partnership firm-

 Choose the correct answer form the options given below.

A-III, B-IV, C-I, D-II

The correct answer is option 2- A-III, B-IV, C-I, D-II.

* Goodwill-AS-26. Goodwill is an intangible asset; hence it is covered by AS-26. According to this standard, Self-generated goodwill is not accounted in the books of account because consideration in money or money's worth is not paid for it.

* Excess profit over normal profit-Super profit. The excess of actual profits over the normal profits is termed as super profits. A firm with good reputation is able to earn super profits.

* Average profit-Likely to earn in future. Goodwill is valued at agreed number of ‘years’ purchase of the average profits of the past few years. It is based on the assumption that a new business will not be able to earn any profits during the first few years of its operations. Hence, the person who purchases a running business must pay in the form of goodwill a sum which is equal to the profits he is likely to receive for the first few years. The goodwill, therefore, should be calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.

* Capital employed- Net assets Capital employed is the total capital contributed in the business by the partners. It is taken as net assets. Net assets is total assets - Outside liabilities.