Partnership

Admission

Easy

common

________ is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

Goodwill

Patent

Capital

✅ Correct Option: 1

Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

Goodwill arises when a business has the ability to earn super profits (profits in excess of normal profits). This excess earning capacity is attributed to factors like established reputation, favorable location, skilled workforce, loyal customer base, brand name, efficient management, and other intangible advantages that the firm possesses.

Normal Profit = Capital Employed × Normal Rate of Return

Super Profit = Actual Average Profit - Normal Profit

When super profits exist, it indicates that the business has certain favorable conditions that allow it to earn more than what an average firm in the industry would earn. The capitalized value of these super profits represents goodwill.

Patent refers to the exclusive legal right to use, manufacture, or sell an invention for a specified period. Copyright refers to the exclusive legal right to reproduce, publish, or sell literary, musical, or artistic work. Capital represents the owner's investment in the business. None of these represent the excess earning capacity based on reputation.

Therefore, Option 1: Goodwill is correct.

2026: 13 May Shift 1

Consider the given steps of calculating the Value of Goodwill on the Basis of Capitalization of Super Profit and arrange them in correct sequence.

(A) Calculation of Super Profits

(B) Calculation of Capital Employed/Net Assets

(D) Calculation of Capitalized value of Super Profit

Choose the correct sequence of the above steps from the options given below:

2026: 29 May Shift 2

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	General Reserve	I.	Old Share - New Share
B.	Sacrificing Ratio	II.	Credit to Revaluation A/c
C.	Increase in value of Asset	III.	Debit to Revaluation A/c
D.	Increase in value of Liability	IV.	Accumulated Profit

Choose the correct answer from the options given below:

2026: 29 May Shift 2

At the time of admission of new partner Vasu, old partners Paresh and Prabhat had debtors of Rs. 6,20,000 and a provision for doubtful debts of Rs. 20,000 in their books. As per terms of admission, provision for doubtful debts is to be maintained on Sundry Debtors at a provision of 5%. How it will be shown in the balance sheet?

2025: 15 May Shift 1

A, B and C are partners in a firm. If D is admitted as a new partner, what will be its affect?

2025: 30 May Shift 2

On the admission of a new partner, an increase in the value of assets is debited to:

2026: 11 May Shift 2

"When the value of goodwill is not given at the time of admission of a new partner. In such a situation it has to be inferred from the arrangement of the capital and profit sharing ratio."

Identify the method of valuation of goodwill being highlighted in above statement.

________ is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

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