Select the Factors affecting the value of goodwill of a firm from the following.
(A) Financial Soundness of Employees employed in the organisation.
(B) Nature of business affects Goodwill of a firm.
(C) Centrally located business enjoys more Goodwill.
(D) Limited Competition helps firm to earn more and thus their goodwill will be high.
(E) Efficiency of Management has no direct influence on Goodwill of a firm.
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B), (C) and (D) only
The book lists nature of business, location, efficiency of management, market situation and special advantages as the factors affecting the value of goodwill.
(A) Financial Soundness of Employees employed in the organisation. — False. The private finances of employees are not a factor of the firm’s goodwill.
(B) Nature of business affects Goodwill of a firm. — True. High value products or stable demand bring more profit and goodwill.
(C) Centrally located business enjoys more Goodwill. — True. A central place with heavy customer traffic raises goodwill.
(D) Limited Competition helps firm to earn more and thus their goodwill will be high. — True. This is the market situation factor.
(E) Efficiency of Management has no direct influence on Goodwill of a firm. — False. Efficient management raises profits and so raises goodwill.
NCERT (2026-27 edition):
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