Goodwill can be created in the books of a partnership firm when
The partnership experiences super profit
A new member is admitted
The business is being expanded
The business suffers high loss
Correct answer is A
The partnership experiences super profit: super profit is the profit that is generated by intangible asset or the profit that is attributed by the tangible asset when such profit is capitalized we get intangible asset or goodwill
The following appears in trading account except
Sales
Carriage outward
Carriage inward
Opening stock
Correct answer is B
Carriage outward: it is the cost of transporting goods from the company to the buyer. it is on debit side of the profit and loss account because it is an expenses incurred on distributing the goods to customer.
The accounting entries for goods stolen in branch will be to debit
The accounting entries for goods stolen in branch will be to debit
Branch stock account and credit branch adjustment account
Branch adjustment account and credit profit and loss account
Branch adjustment account and credit branch stock account
Correct answer is A
A branch account is a small part of business account operating with some degree of independence . It maintains its own personal/self accounting entries to determine the profit/loss made by a specific period of time
The accounting entries is to debit profit and loss account and credit branch stock. The profit and loss is debited because the cost of the stolen goods must be charged against the profit for the period to balance the account and the branch stock account is credited because the cost of the goods is out of the branch already.
Discount allowed is enjoyed by
Managers
Customers
Suppliers
Staff of the company
Correct answer is B
Customer: customers are the one that enjoys discount allowed. It is allowed to them by the suppliers. it can be in cash or trade
An advantage of FIFO method of stock valuation is that
It serves as a control during inflation
It is calculated at the end of the year
It is progressive in nature
Its flow of cost is in sequence with the flow of stock
Correct answer is D
The major advantage of the first in first out(FIFO) method of stock valuation
1. it is very easy to apply
2. no manipulation of income is possible
3. the balance sheet amount for inventory is likely to approximate the current market value
4. its flow of cost is in sequence with the flow of stock. Since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it corresponds with the normal physical flow of goods