1870+ Financial Accounting Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration in Computer Applications (BBA [CA]) , Bachelor of Business Administration (BBA) , Bachelor of Accounting and Finance (BAF) , Bachelor of Commerce (B Com) , Cost Accounting .

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101.	Goodwill is defined as Sol:
A.	Intangible asset
B.	Fictitious asset
C.	Current asset
D.	Liquid asset
Answer» A. Intangible asset

102.	Break-even indicates Sol:
A.	Revenues are more than cost
B.	Revenues and cost are equal
C.	Costs are more than revenue
D.	None of the Above
Answer» B. Revenues and cost are equal

103.	The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called Sol:
A.	Surplus
B.	Super Profit
C.	Reserve
D.	Goodwill
Answer» D. Goodwill

104.	A firm’s goodwill is not affected by Sol:
A.	Location of the firm
B.	The reputation of the Firm
C.	Better Customer Service
D.	None of the Above
Answer» D. None of the Above

105.	Weighted average method of calculating goodwill is used when Sol:
A.	Profits are not equal
B.	Profits show an increasing or decreasing trend
C.	Profits are Fluctuating
D.	None of the Above
Answer» B. Profits show an increasing or decreasing trend

106.	Under the capitalisation method, the formula for calculating the goodwill is Sol:
A.	Super profits multiplied by the rate of return
B.	Average profits multiplied by the rate of return
C.	Super profits divided by the rate of return
D.	Average profits divided by the rate of return
Answer» C. Super profits divided by the rate of return

107.	The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 12,00,000. The value of goodwill of the company as per the capitalisation method will be
A.	RS 82,00,000
B.	RS 1200000
C.	RS 7200000
D.	RS 4200000
Answer» C. RS 7200000

108.	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 capitalisation of average actual profit will be
A.	Rs 200000
B.	Rs 10000
C.	Rs 5000
D.	Rs 100000
Answer» D. Rs 100000

109.	When there is a change in the current partners’ association that results in ending the existing agreement and initiate a formation of a new agreement is known as Sol:
A.	Revaluation of Partnership
B.	Reconstitution of Partnership
C.	Realisation of Partnership
D.	None of the Above
Answer» B. Reconstitution of Partnership

110.	Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by:
A.	Spicer and Pegler
B.	ICAI
C.	Lord Elton
D.	AICPA
Answer» C. Lord Elton

111.	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
A.	Rs 12000
B.	Rs 10000
C.	Rs 15000
D.	None of the Above
Answer» A. Rs 12000

114.	At the time of admission of a new partners general reserve appearning in the old Balance Sheet is transferred to:
A.	All Partner’s Capital Accounts
B.	New Partner’s Capital Account
C.	Old Partners’. Capital Accounts
D.	None of these
Answer» C. Old Partners’. Capital Accounts

115.	An asset which does not have a physical form but has the potential to have a monetary value is known as an ------------- Sol:
A.	Fictitious Asset
B.	Physical Asset
C.	Intangible Asset
D.	all
Answer» C. Intangible Asset

116.	Valuation of ------------- Assets is difficult. Sol:
A.	Intangible
B.	Wasting
C.	Current
D.	all
Answer» A. Intangible

117.	Following are forms of Intangible assets. Sol:
A.	Brand, Goodwill, Furniture, Design
B.	Goodwill, Patent Rights, Machinery
C.	Brand, Trademark, Copyrights, Know how
D.	all
Answer» C. Brand, Trademark, Copyrights, Know how

112.	When there is no Goodwill Account in the books and goodwill is raised,…………….account will be debited Sol:
A.	Partner’s Capital
B.	Goodwill
C.	Cash
D.	Reserve
Answer» B. Goodwill

113.	The amount of goodwill is paid by new partner : Sol:
A.	for the payment of capital
B.	for sharing the profit
C.	for purchase of assets
D.	None of these
Answer» B. for sharing the profit

118.	The value of Intangible assets is ------------- over a period of time. Sol:
A.	Amortized
B.	Added
C.	Depreciated
D.	all
Answer» A. Amortized

119.	The following statement stands true when intangible assets are compared to the current assets Sol:
A.	Useful life is short
B.	Useful life is moderate
C.	Useful life is long
D.	all
Answer» C. Useful life is long

120.	This is the feature of Intangible assets Sol:
A.	They are valuable to internal and external entities.
B.	They are always acquired.
C.	They may be internally created or purchased
D.	all
Answer» C. They may be internally created or purchased

121.	Intangibility refers to ------------------ Sol:
A.	Economic benefit
B.	Absence of future value
C.	Absence of physical form and creation.
D.	all
Answer» C. Absence of physical form and creation.

122.	An exclusive legal right in the form of Logo, Brand, Symbol, Name of Design is known as ---- Sol:
A.	Trademark
B.	Patent Right
C.	Copy Right
D.	all
Answer» A. Trademark

123.	A unique name of symbol or design given to a product or service for easy identification and distinguishing it from the competitor is known as---------
A.	Patent Right
B.	Trade Secret
C.	Brand
D.	all
Answer» C. Brand

124.	A bundle of rights given by law to the creators of literary, artistic, dramatic, musical work is known as Sol:
A.	Patent Rights
B.	Trade Rights
C.	Copyrights
D.	all
Answer» C. Copyrights

125.	An exclusive right given to an entity of individual or business firm to manufacture or sell an invention is known as Sol:
A.	Copyright
B.	Trade right
C.	Patent right
D.	all
Answer» C. Patent right

1870+ Financial Accounting Solved MCQs

Goodwill is defined as Sol:

Break-even indicates Sol:

The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called Sol:

A firm’s goodwill is not affected by Sol:

Weighted average method of calculating goodwill is used when Sol:

Under the capitalisation method, the formula for calculating the goodwill is Sol:

The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 12,00,000. The value of goodwill of the company as per the capitalisation method will be

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 capitalisation of average actual profit will be

When there is a change in the current partners’ association that results in ending the existing agreement and initiate a formation of a new agreement is known as Sol:

Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by:

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

When there is no Goodwill Account in the books and goodwill is raised,…………….account will be debited Sol:

The amount of goodwill is paid by new partner : Sol:

At the time of admission of a new partners general reserve appearning in the old Balance Sheet is transferred to:

An asset which does not have a physical form but has the potential to have a monetary value is known as an ------------- Sol:

Valuation of ------------- Assets is difficult. Sol:

Following are forms of Intangible assets. Sol:

The value of Intangible assets is ------------- over a period of time. Sol:

The following statement stands true when intangible assets are compared to the current assets Sol:

This is the feature of Intangible assets Sol:

Intangibility refers to ------------------ Sol:

An exclusive legal right in the form of Logo, Brand, Symbol, Name of Design is known as ---- Sol:

A unique name of symbol or design given to a product or service for easy identification and distinguishing it from the competitor is known as---------

A bundle of rights given by law to the creators of literary, artistic, dramatic, musical work is known as Sol:

An exclusive right given to an entity of individual or business firm to manufacture or sell an invention is known as Sol:

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the value of goodwill at five years of purchase is ----------- Sol:

From the profits of previous three years, Rs 150000, Rs 300000, and Rs250000/- and the loss in a year ( Rs. 100000/-) the value of goodwill at three years of purchase is ---------

If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit

Goodwill is defined as Sol:

Weighted average method of calculating goodwill is used when Sol:

The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 412,00,000. The value of goodwill of the company as per the capitalization method will be

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:

If the amount of super profit is negative ,what des it indicate Sol:

Which goodwill is recorded in the books of Accounts Sol:

When does need valuation of Goodwill Sol:

Which methods of valuation of Goodwill Sol:

Which factor affecting th value of Goodwill Sol:

The profits of the last three years is 42000, 39000,45000. Value of goodwill of 2 years purchase of average profit is

What do you mean by Super Profit Sol:

The excess of Average profit over normal profit is called Sol:

The monetary value of reputation of business 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:

Which methods of valuation of Goodwill Sol:

Goodwill is an intangible Assets Sol:

Goodwill be purchased Sol:

Goodwill will have no effect on business Financial status Sol:

What is Royalty? Sol:

Mining Royalty is based on Sol:

Patent Royalty is based on Sol:

Copyright royalty is based on Sol:

The excess amount which the firm can get on selling its assets over and above the saleable
value of its assets is called
Sol:

The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15%
and the profit of the year is 12,00,000. The value of goodwill of the company as per the
capitalisation method will be

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 capitalisation of
average actual profit will be

When there is a change in the current partners’ association that results in ending the existing
agreement and initiate a formation of a new agreement is known as
Sol:

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

When there is no Goodwill Account in the books and goodwill is
raised,…………….account will be debited
Sol:

An asset which does not have a physical form but has the potential to have a monetary
value is known as an -------------
Sol:

The following statement stands true when intangible assets are compared to the current
assets
Sol:

A bundle of rights given by law to the creators of literary, artistic, dramatic, musical work
is known as
Sol:

An exclusive right given to an entity of individual or business firm to manufacture or sell
an invention is known as
Sol:

From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the value
of goodwill at five years of purchase is -----------
Sol:

The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15%
and the profit of the year is 412,00,000. The value of goodwill of the company as per the
capitalization method will be

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:

The profits of the last three years is55000,50000,45000. Value of goodwill of 2 years
purchase of average profit is
Sol:

126.	From the profits of previous three years, Rs 150000, Rs 200000, and Rs250000/- the value of goodwill at five years of purchase is ----------- Sol:
A.	Rs12,50,000/-
B.	Rs 7,50,000/-
C.	Rs10,00,000/-
D.	all
Answer» C. Rs10,00,000/-

127.	From the profits of previous three years, Rs 150000, Rs 300000, and Rs250000/- and the loss in a year ( Rs. 100000/-) the value of goodwill at three years of purchase is ---------
A.	Rs 8,00,000
B.	Rs 6,00,000
C.	Rs 4,50,000
D.	all
Answer» C. Rs 4,50,000

128.	If Average Profit of a certain firm for last five years is Rs5,00,000 , Normal profit is Rs 3,50,000/-. What would be the Value of Goodwill at 3years purchase of super profit
A.	Rs 8,00,000
B.	Rs 6,00,000
C.	Rs 4,50,000
D.	all
Answer» C. Rs 4,50,000

129.	Goodwill is defined as Sol:
A.	Intangible asset
B.	Fictitious asset
C.	Current asset
D.	Current asset
Answer» A. Intangible asset

130.	Weighted average method of calculating goodwill is used when Sol:
A.	Profits are not equal
B.	Profits show a trend
C.	Profits are fluctuating
D.	None of the above
Answer» B. Profits show a trend

131.	The total capital employed in the company is ₹8,00,000 a reasonable rate of return is 15% and the profit of the year is 412,00,000. The value of goodwill of the company as per the capitalization method will be
A.	82,00,000
B.	1200000
C.	7200000
D.	4200000
Answer» C. 7200000

132.	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:
A.	2,00,000
B.	10000
C.	5000
D.	100000
Answer» D. 100000

133.	If the amount of super profit is negative ,what des it indicate Sol:
A.	There is no goodwill
B.	There is average goodwill
C.	Both
D.	None
Answer» A. There is no goodwill

134.	Which goodwill is recorded in the books of Accounts Sol:
A.	Purchase Goodwill
B.	Self Generated
C.	Both
D.	None
Answer» A. Purchase Goodwill

135.	When does need valuation of Goodwill Sol:
A.	On retirement or Death of a partner
B.	Admission of Partner
C.	None of the Above
D.	Both
Answer» D. Both