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Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Admission of a Partner

Question:

Match the following list 1 with list 2.

LIST 1 LIST 2
A) Average profit I) Capitalised value - Net assets
B) Goodwill II) Normal profit x Weight assigned
C) Weighted profit III) Total assets - Liabilities
D) Net asset of firm IV) Super profit + normal profit

Choose the correct answer from the options given below.

Options:

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

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

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

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

Correct Answer:

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

Explanation:

The correct answer is option 3- A-IV, B-I, C-II, D-III.

LIST 1 LIST 2
A) Average profit IV) Super profit + normal profit
B) Goodwill I) Capitalised value - Net assets
C) Weighted profit II) Normal profit x Weight assigned
D) Net asset of firm III) Total assets - Liabilities

* Average profit- Super profit = Average profit - Normal profit. So, Average profit is super profit + normal profit.

* Goodwill is calculated by many methods. One of the method is capitalisation of average profit in which the formula for calculating goodwill is Total capitalised value of firm - net assets.

* Weighted profit is calculated to calculated goodwill through the weighted average profit method. Weighted profit is calculated by the formula- profit x weight assigned. After calculation of weighted profit, it is totalled and divided by total of weights so calculated weighted average profit which is later multiplied by no of years purchase to calculate value of goodwill.

* Net assets of the firm can be calculated by subtracting liabilities of the firm from the total assets of the firm.

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