Use the following information to answer the question below
Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
The double entry to record the good will in the books is debit
Cash account and credit goodwill account
Goodwill account and credit purchase of business account
Goodwill account and credit cash account
Purchase of business account and credit cash account
Correct answer is B
Goodwill is the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold. In order to calculate goodwill, the fair market value of identifiable assets and liabilities of the company acquired is deducted from the purchase price.
Use the following information to answer the question below
Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
How much was paid for goodwill?
GH¢ 350,000
GH¢ 260,000
GH¢ 90,000
GH¢ 60,000
Correct answer is D
Assets 670,000 - liabilities 320,000 = 350,000 (business value after liabilities claims)
Purchase price 410,000 - 350,000 business value = 60,000 goodwill
In which of the following accounts is interest on partners capital found?
Profit and Loss
Trading
Income surplus
Profit and Loss appropriation
Correct answer is D
The main intention of preparing a profit and loss appropriation account is to show the distribution of profits among the partners. It is debited with interest on capital and remuneration to partners and credited with the net profits b/d from the profit and loss account and interest on drawings.
N13.200
N12,000
N10,800
N10,200
N9,180
Correct answer is D
No explanation has been provided for this answer.
N1,020
N1,200
N10,800
N2,820
N1,800
Correct answer is C
No explanation has been provided for this answer.