Question : Which of the following is added to previous year's profit for finding normal profit for valuation of goodwill?

Option 1: Profit on sale of fixed asset

Option 2: Loss due to fire

Option 3: Overvaluation of closing stock

Option 4: All of these

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 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 : 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 statement is incorrect?

Option 1: Loss on sale of fixed assets is added back and profit on sale of fixed assets is deducted from net profit while arriving at the cash flow from operating activities

Option 2: Depreciation is added back to net profit while calculating cash flows from operating activities

Option 3: Depreciation increase the value of net profit without reducing the cash balance as it is a non- cash item

Option 4: None of the above

Question : Which of the following statement is incorrect?

Option 1: Loss on sale of fixed assets is added back and profit on sale of fixed assets is deducted from net profit while arriving at the cash flow from operating activities

Option 2: Depreciation is added back to net profit while calculating cash flows from operating activities

Option 3: Depreciation increase the value of net profit without reducing the cash balance as it is a non- cash item

Option 4: None of the above