Question : Assertion A: The average business profit of the firm is Rs 5,00,000. The capital employed in the business is Rs 50,00,000. If the normal rate of return is 8%, the super profit will be Rs 1,00,000.

Reason R:- super profit is the excess of Average profits over the normal profits. capital employed is Rs 50,00,000 and 8% is the expected return, the expected normal profit will be Rs 4,00,000. Since the normal profit is Rs 5,00,000. The super profit will be Rs 1,00,000.

In the context of the above two statements which of the following is correct?

 

Option 1: Assertion A and Reason R are correct but the reason R is not the correct explanation of Assertion A

Option 2: Both assertion A and reason R are correct and reason R is the correct explanation of Asseration A

Option 3: Assertion A is correct but reason R is not correct 

Option 4: Both Assertion A and reason R are incorrect .

Question : Assertion A:- Net Assets of a firm after deducting advertisement suspense of Rs 50,000 are Rs 10,00,000, and outside liabilities of the firm are Rs 3,00,000. Normal rate of return 10% and average profit of the firm is Rs 70,000. Value of goodwill as per capitalization of super profit is Rs 1,00,000.

Reason R:-  Capital employed is Rs 7,00,000 (10,00,000 - 3,00,000). Normal profit is Rs 70,000 (7,00,000 X 10%). Actual average profit is Rs 70,000. Thus, super profit is Nil, capitalized at 10% value of goodwill comes to Nil.

In the context of the above two statements, which of the following is correct?

Option 1: Both, Assertion A and Reason R are correct and reason R is correct explanation of Assertiion A

Option 2: Assertioin A and reason R are correct but the reason R is not correct explanation of Assertion  A

Option 3: Assertion A is not correct but Reason R is correct 

Option 4: Both Assertion A and Reason R are incorrect

Question : Assertion A:- In the books of Suhni, Reema and Chandni, advertisement suspense existed at Rs 1,80,000. The profit-sharing ratio was changed from equal sharing to 5:3:2. Rs 1,80,000 will be written off equally at the time of change in the profit-sharing ratio.

Reason R:- Advertisement suspense is written off in the old profit-sharing ratio when the profit-sharing ratio changes. 

Option 1: Assertion A and Reason R are correct but Reason R is not the correct explanation of Assertion A

 

Option 2: Both Assertion A and Reason R are correct and Reason R is the correct explanation of Assertion A 
 

Option 3: Only Assertion A is correct 
 

Option 4: Assertion A is not correct but the Reason R is correct

Question : Assertion (A): A loan from a relative of a partner is an external liability.

Reason (R): It is not transferred to the Realisation Account.

Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)

Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Option 3: Assertion (A) is correct but the Reason (R) is not correct.

Option 4: Both Assertion (A) and Reason (R) are not correct.

Question : Assertion (A): Any firm that earns normal profits or is incurring losses has no goodwill.
Reason (R): Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Option 2: Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A)

Option 3: Assertion (A) is true but Reason (R) is false

Option 4: Assertion (A) is false but Reason (R) is true

Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt.

Reason (R): In a partnership firm, partners have unlimited liability.

Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)

Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Option 3: Only Assertion (A) is correct.

Option 4: Assertion (A) is not correct but the Reason (R) is correct.