Under the average clause, the loss is suffered by both insurer and insured in the ratio of
risk covered
Sol:

Related MCQs

• Goodwill is to be calculated at one and half year’ purchase of average profit of last 5 years. The firm earned profits during 3 years as ₹ 20,000 ₹ 18,000 and ₹ 9,000 and suffered losses of ₹ 2,000 and ₹5,000 in last 2 years. The amount of goodwill will be
• Royalty accounting is covered under Companies Act 1956 Sol:
• The main objective of average clause contained in a fire insurance policy is to
• The party whose risk is covered in insurance is known as ……….
• The statement of profit or loss is prepared according to _______ method to calculate profit or loss under single entry system
• A firm earns ₹1,00,000. The normal rate of return is 10%. The assets of the company amounted to ₹11,00,000 and liabilities to ₹1,00,000. Value of goodwill by the capitalization of average actual profit will be Sol:
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• Weighted average method of calculating goodwill is used when Sol:
• The excess of Average profit over normal profit is called Sol:
• The profits of the last three years is55000,50000,45000. Value of goodwill of 2 years purchase of average profit is Sol: