Practicing Success
Match List I with List II.
Choose the correct answer from the options given below : |
A-IV, B-II,C-I, D-III A-III, B-II, C-I, D-IV A-III, B-IV, C-II, D-I A-IV, B-III,C-I, D-II |
A-III, B-IV, C-II, D-I |
The correct answer is option (3) : A-III, B-IV, C-II, D-I * Average Profit = Total Profit / No. of year. * Super Profit = Average Profit- Normal Profit. Super profit is earned by a firm when there actual profit is more than the normal profit i.e. profit earned by a similar business. * Firm's Capital = Total Asset- outside liability. Firms’ Capital = Total Assets (excluding goodwill) – Outside Liabilities, Where outside Liabilities include both long term and short term Liabilities. * Weighted Average = Total weighted profits / Total weights. The procedure for calculating goodwill by weighted average profit method is as follows- Firstly if there is any abnormal gain or loss then it is deducted or added respectively from the particular year's profit.Give high weight to the profit of the recent year- Weights are assigned to all years in the numbering from 1,2,3 and so on. Higher weight is provided to the latest year's profit.Now the weights assigned to year's profit and adjusted profit is multiplied to find out the product. After that total of the product and weights is done and then the total of product is divided by the total no of weights to find out the weighted average profit. At last multiply the weighted average profit with no of years purchase to get value of goodwill. |