A-AS Level (CIE) Accounting Paper-3: Specimen Questions with Answers 19 - 20 of 50

Question 19

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Question

MCQ▾

What will be the amount of purchase?

What will be the amount of purchase? What will be the amount of purchase?
Cost of goods sold Closing stock Opening stock$1,50,000 $40,000 $60,000

Choices

Choice (4)
a.1,25,000
b.1,20,000
c.1,50,000
d.1,30,000

Answer

d.

Explanation

Question 20

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Question

MCQ▾

When good will already appears in the books and new partner brings his share of goodwill/premium in cash. Which of the following statements are correct?

Choices

Choice (4)
a.Goodwill account is credited.
b.Existing goodwill will have to be written off
c.old partner’s capital account is debited in their old profit-sharing ratio
d.All a. , b. and c. are correct

Answer

d.

Explanation

When Goodwill Already Appears in the Books and new partner brings his share of goodwill/premium in Cash.

If new partner brings his share of goodwill in cash, and if the Goodwill Account already appears in the books of the firm, first the existing Goodwill Account will have to be written off. For this purpose, old Partners’ Capital. Accounts are debited in their old profit-sharing ratio and Goodwill Account is credited. Thus, the following entry is passed to write off the existing goodwill:

Old Partner’s Capital A/c Dr

To Goodwill A/C

(Goodwill written off in old ratio)

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