Question:
Define Goodwill.
Define Goodwill.
Show Hint
Goodwill arises due to reputation, location, customer trust and managerial efficiency.
Updated On: Feb 16, 2026
Hide Solution
Verified By Collegedunia
Solution and Explanation
Goodwill represents the good name, reputation, customer loyalty and earning capacity of a business over and above the normal profits.
Was this answer helpful?
0
0
Top Questions on Goodwill
- Chandan, Deepak and Elvish were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 2. Their Balance Sheet as at 31st March, 2024 stood as follows:
Balance Sheet of Chandan, Deepak and Elvish as at 31st March, 2024
Chandan retired from the firm on 1st April, 2024 on the following terms:Liabilities Amount (₹) Assets Amount (₹) Capitals: Fixed Assets 27,00,000 Chandan 7,00,000 Stock 3,00,000 Deepak 5,00,000 Debtors 2,00,000 Elvish 3,00,000 Cash 1,00,000 General Reserve 4,50,000 Creditors 13,50,000 Total 33,00,000 Total 33,00,000
[(i)] Fixed assets were to be depreciated by 10%.
[(ii)] Debtors of ₹ 30,000 were to be written off as bad debts.
[(iii)] Goodwill of the firm was valued at ₹ 6,00,000 and the retiring partner’s share is adjusted through the capital accounts of the remaining partners.
[(iv)] Chandan was paid through cash brought in by Deepak and Elvish in such a way so as to make their capitals proportionate to their new profit sharing ratio. Prepare Revaluation Account and Partners’ Capital Accounts. - The capital of the firm of Rajat and Karan is ₹ 15,00,000 and the market rate of interest is 12%. Annual salary of Rajat and Karan is ₹ 20,000 and ₹ 30,000 respectively. The profits for the last three years were ₹ 2,40,000, ₹ 2,80,000 and ₹ 3,20,000. Goodwill of the firm is to be valued on the basis of two years’ purchase of last three years’ average super profits. Calculate the goodwill of the firm.
- Which of the following is not the main factor affecting the value of Goodwill?
- Write any two factors affecting Goodwill.
- Under which method of valuation of Goodwill, normal rate of return is not required?
View More Questions
Questions Asked in PSEB exam
- Explain the importance of E-waste management and proper disposal of electronic gadgets.
- PSEB XII - 2026
- Green Computing
- Explain the CIA Triad (Confidentiality, Integrity, and Availability) in cyber safety.
- PSEB XII - 2026
- Cyber Security
- Explain the concepts of Primary Key, Foreign Key, and Candidate Key.
- PSEB XII - 2026
- Database Management Systems
- Write the syntax and use of SQL DDL commands (CREATE, ALTER, DROP) and DML commands (INSERT, UPDATE, DELETE).
- PSEB XII - 2026
- Database Management Systems
- What are the main provisions of the Indian IT Act 2000?
- PSEB XII - 2026
- Cyber Security
View More Questions