Assertion Reason MCQs of Goodwill class 12 Accountancy
Looking for important Assertion Reason MCQs of Goodwill chapter with answers and solutions of Accountancy class 12 CBSE, ISC and State Board.
Assertion Reason Multiple Choice Questions with answers of Goodwill chapter of Accountancy class 12 CBSE
Let’s Practice
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A) The factors which affect profits, also affect goodwill.
Reason (R): Profits are directly related to goodwill
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Explanation:- Profit is directly related to goodwill. More is the reputation (goodwill) of the firm, higher are the profits.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Purchased goodwill means goodwill for which consideration has been paid.
Reason (R): It is shown in the Balance Sheet as a liability.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Explanation:- The goodwill that is purchased by paying consideration in cash is called purchased goodwill. But it is recorded as the asset side of Balance Sheet.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Goodwill is considered an intangible asset but not a fictitious asset.
Reason (R): Goodwill can neither be seen and touched nor it can be purchased or sold with any other asset.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Explanation:- Goodwill is intangible assets but not the fictitious asset. The assertion is true. The Goodwill can be purchased or sold. Thus reason is false.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Abnormal loss of a year should be subtracted from the net profit of the year for the calculation of goodwill.
Reason (R): Future profits depend upon the average performance of the business in the past.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – d)
Explanation:- Abnormal loss is added back to the profit to calcualte goodwill. Thus Assertion is false. The future profits of a firm depends upon the average performance of the business in the past. Thus reason is true.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Self-generated goodwill is internally generated or hard-earned goodwill.
Reason (R): It arises due to the continued hard work of the organization, its better quality products, etc.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Weighted average profit method is considered better than the simple average profit method because it assigns more weightage to the profits of the latest year which is more likely to be earned in the future.
Reason (R): The highest weight is attached to the profit of the most recent year.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Goodwill belongs to the category of intangible assets such as patents, trademarks, copyrights, etc.
Reason (R): Goodwill can not be seen or touched.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): An older business is likely to have lesser goodwill.
Reason (R): The number of customers of an older business will be more in comparison to the customers of new entrants.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – d)
Explanation:- Older is the business higher is the goodwill and customer base.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): A new business is likely to have lesser goodwill.
Reason (R): Goodwill is an intangible asset.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – b)
Explanation:- Both Assertion and Reason are true, but reason does not explain the reason.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Goodwill requires adjustment at the time of reconstitution of a firm.
Reason (R): The nature and location of business do not affect the valuation of goodwill.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Any firm that earns normal profits or is incurring losses has no goodwill.
Reason (R): Goodwill is the value of the reputation of a firm in respect of the profits expected in the future over and above the normal profits.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – a)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Over a period of time, a well-established business develops an advantage of good name, reputation, and wide business connections.
Reason (R): Self-generated goodwill is shown as an asset in the books
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – c)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Goodwill is an intangible asset.
Reason (R): The goodwill is calculated by multiplying the past average profits by the number of years during which the anticipated profits are expected to accrue.
Options
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
Ans – b)
