Question : Expenses expected to be incurred to earn profit are deducted to determine normal profit for valuation of __________.

 

Option 1: Preliminary expenses 

Option 2: Normal expenses 

Option 3: Underwriting commission 

Option 4: Goodwill 

Question : Which of the following items are added to the previous year's profits to find normal profit for the valuation of goodwill?

Option 1: loss on sale of fixed assets 

Option 2: manager’s commission 

Option 3: undervaluation of closing stock 

Option 4: all of the above

Question :  Under the super profit method, goodwill is calculated by

Option 1: Number of years purchase X Average profit

Option 2: Number of years purchase X Super profit

Option 3: super profit/normal rate of return

Option 4: super profit - normal profit 

Question : What are super profits?

Option 1: Actual profit - Normal Profit

Option 2: Normal profit - Actual Profit

Option 3: Actual profit + Normal Profit

Option 4: None of the above

Question : Under which method of valuation of goodwill, normal rate of return is not considered?

Option 1: Average profit method

Option 2: Capitalisation method

Option 3: Super profit method

Option 4: All of these

Question :

Which of the following statements is correct in relation with expenses on revaluation account?

Option 1: Expenses may be incurred by the firm to give effect to the change in profit-sharing ratio.

Option 2: These expenses may be incurred as remuneration to a partner or as payment to an outside party for rendering services.

Option 3: The expenses so incurred are debited to Revaluation Account being expenses relating to reconstitution of the firm.

Option 4: All of the above