Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Admission of a Partner

Question:

Which special advantages contribute to a higher value of goodwill?

Options:

Low rate and assured supply of electricity

High number of competitors

Unstable demand for the firm's products

Lack of patents and trademarks

Correct Answer:

Low rate and assured supply of electricity

Explanation:

Special advantages such as a low rate and assured supply of electricity contribute to a higher value of goodwill. These advantages can positively impact a firm's operations and profitability. A low rate of electricity reduces operational costs, leading to increased profitability. An assured supply of electricity ensures smooth and uninterrupted production, which enhances the firm's reputation and customer satisfaction. On the other hand, options b) High number of competitors, c) Unstable demand for the firm's products, and d) Lack of patents and trademarks do not directly contribute to a higher value of goodwill. In fact, a high number of competitors, unstable demand, or lack of patents and trademarks may create challenges for the firm, potentially impacting its profitability and reputation.