Accountancy Part AAdmission of a Partner

Identify the factor affecting value of goodwill highlighted in the fo…

Identify the factor affecting value of goodwill highlighted in the following statement

“The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill.”

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Market situation

NCERT (2026-27 edition):
Factors Affecting the Value of Goodwill – “… 3. Efficiency of management: A well-managed concern usually enjoys the advantage of high productivity and cost efficiency. This leads to higher profits and so the value of goodwill will also be high. 4. Market situation: The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill.”