Partnership

Admission

Easy

The profit for the five years of a firm are as follows – year 2013 Rs. 4,00,000; year 2014 Rs. 3,98,000; year 2015 Rs. 4,50,000; year 2016 Rs. 4,45,000 and year 2017 Rs. 5,00,000. The goodwill of the firm on the basis of 4 years purchase of 5 years average profits is-

Rs. 4,38,600

Rs. 21,93,000

Rs. 17,54,400

Rs. 20,45,200

✅ Correct Option: 3

Given Information:

Profits for 5 years (2013-2017)
Goodwill basis: 4 years' purchase of 5 years' average profits

Calculating Average Profit:

Total Profits = Rs. 4,00,000 + Rs. 3,98,000 + Rs. 4,50,000 + Rs. 4,45,000 + Rs. 5,00,000 = Rs. 21,93,000

Average Profit = $\frac{\text{Total Profits}}{\text{Number of Years}}$ = $\frac{\text{Rs. 21,93,000}}{5}$ = Rs. 4,38,600

Calculating Goodwill:

Goodwill = Average Profit × Number of Years' Purchase

Goodwill = Rs. 4,38,600 × 4 = Rs. 17,54,400

The term "4 years' purchase" means the average profit is multiplied by 4 to arrive at the goodwill value. This represents the number of years' profit that a buyer is willing to pay as a premium for acquiring the business.

2026: 21 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Sum of the product/ Total weights	(I) Normal Profit
(B) Firm Capital X Rate of return/100	(II) Weighted Average Profit
(C) Bank A/c Dr. To Premium for Goodwill A/c	(III) Amount of goodwill withdrawn by sacrificing partners
(D) Sacrificing Partners' Capital A/c Dr. To Bank A/c	(IV) Amount brought by new partner as his share of goodwill

Choose the correct answer from the options given below:

2025: 13 May Shift 2

Goodwill is -

2026: 31 May Shift 1

The books of a business showed that the firm's capital employed on December 31, 2025 was Rs. 7,00,000 and the profits for the last five years were: 2021-Rs. 80,000; 2022-Rs. 85,000; 2023-Rs. 75,000; 2024- Rs. 80,000; 2025-Rs. 75,000. What will be the value of goodwill based on 3 years' purchase of the super profits of the business, given that the normal rate of return is 10%?

2026: 21 May Shift 2

Reconstitution of a partnership firm usually does not take place at the time of :

2023: 20 June Shift 2

A and B are partners sharing profits in the ratio of 2:1. C is admitted for the 1/4th share of profits, who brings Rs.20,000 as capital. After all adjustments related to goodwill, revaluation of assets and reassessment of liabilities etc, Capital of A and B are Rs.45,000 and Rs.15,000 respectively. It is agreed that partners capitals should be according to the new profit sharing ratio.

Determine the new capital of B.

2025: 26 May Shift 2

Vijay and Manohar share profits and losses in the ratio of 2:1. They admit Prakash as a partner with 1/4 share in profits with a guarantee that his share of profit will be at least Rs. 50,000. The net profit of the firm for the year ending March 31, 2015, was Rs. 1,60,000. Calculate the amount of profit Vijay will get:

The profit for the five years of a firm are as follows – year 2013 Rs. 4,00,000; year 2014 Rs. 3,98,000; year 2015 Rs. 4,50,000; year 2016 Rs. 4,45,000 and year 2017 Rs. 5,00,000. The goodwill of the firm on the basis of 4 years purchase of 5 years average profits is-

Solution

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CUET Accountancy Past Year Questions (Topic-Wise)