Question : O, M and R are partners sharing profits and losses equally. They agree to admit Dev for equal share. For this purpose, goodwill is to be valued at four years purchase of average profit of last five years. Profits for the past five years were:
31st March,2020
Profit/(Loss)
(1,20,000)
On 1st April, 2019, 5 cycles costing Rs. 20,000 were purchased and were wrongly debited to travelling expenses. Depreciation on cycles was to be charged @ 25% p.a. value of goodwill will be
Option 1: 1,88,000
Option 2: 1,08,000
Option 3: 2,00,000
Option 4: 3,20,000
Correct Answer: 1,88,000
Solution : Answer = 1,88,000
Calculation of Normal Profit:
Year-Ended Normal Profit/(Loss) (Rs.)
Total Normal Profit 2,35,000
Average Profit = = Rs. 2,35,000/5 = Rs. 47,000
Goodwill = Average Profit × Number of Year Purchase = Rs. 47,000 × 4 = Rs. 1,88,000.
Calculation of Adjusted Loss for the year ended 31st March 2020: Rs.
Loss for the year ended 31st March 2020 = 1,20,000
Less: Cost of Cycles wrongly debited to Profit and Loss A/c = (20,000)
= 1,00,000
Add: Depreciation @ 25% p.a. on Rs. 20,000 (cycles) = 5,000
Loss for the year = 1,05,000 Hence, the correct option is 1.
Question : Furniture as on 31st March, 2019—Rs. 4,40,000; Furniture (having book value as on 1st April, 2019—Rs. 40,000) sold at a loss of 20% on 31st December, 2019. Furniture is to be depreciated @ 10% p.a. Furniture costing Rs. 3,00,000 was also purchased on 1st October, 2019. Calculate the amount of Depreciation and loss on the sale of furniture to be transferred to the Income and Expenditure Account.
Option 1: Loss on sale of furniture Rs 74,000 Depreciation Rs 55,000
Option 2: Loss on sale of furniture Rs 7,400 Depreciation Rs 3,000
Option 3: Loss on sale of furniture Rs 7,400 Depreciation Rs 58,000
Option 4: Depreciation Rs 50,000 Loss on sale of furniture Rs 3,700
Question : While purchasing an item costing Rs. 600, Rashi had to pay sales tax at 5%. What amount did Rashi have to pay as sales tax?
Option 1: Rs. 30
Option 2: Rs. 60
Option 3: Rs. 45
Option 4: Rs. 15
Question : The Gross Profit Ratio of a Company is 20%. Which of the following transactions will not change in gross profit ratio?
Option 1: Goods costing Rs. 1,50,000 sold for Rs. 2,00,000.
Option 2: Goods costing Rs. 3,40,000 sold for Rs. 4,00,000.
Option 3: Revenue from Operations Rs. 2,00,000.
Option 4: None of the above
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