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Home Questions W984D66289
Target Exam

CUET

Subject

Accountancy

Chapter

Admission of a Partner

Question:

Match the following regarding the calculation of goodwill :

LIST 1 LIST 2
1) Abnormal gain a) Added to profit of the particular year
2) Closing stock of the last year b) Surplus invested outside
3) Nontrade investments c) Opening stock of the current year
4) Abnormal loss d) Deducted from the profit of the particular year

 

Options:

1) d 2) c 3) a 4) b

1) a 2) d 3) c 4) b

1) a 2) b 3) d 4) c

1) d 2) c 3) b 4) a

Correct Answer:

1) d 2) c 3) b 4) a

Explanation:

*Abnormal gain- The abnormal profit of the year is subtracted from the net profit of that year.

*Closing stock of the last year- Closing stock of the previous year becomes the opening stock of the next year.

*Non trade investments- Income not earned from the business operations, such as income from investments is deducted from the net profit of that year.  This investment is done to invest surplus funds of the firm to earn extra revenue.

*Abnormal loss- The abnormal loss of the year is added to the net profit of that year.

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