Question

Following are the factors affecting goodwill except:

• A. Nature of business
• B. Efficiency of management
• C. Technical know how
• D. Location of the customers

Answer 1

Answer: (C), (D)

The correct options are
C Technical know how
D Location of the customers

Goodwill is defined as "the present value of a firm's anticipated excess earnings". Thus goodwill exists only when the firm earns super profits. Any firm that earns normal profits or is incurring loss has no goodwill. The factors affecting the value of goodwill are:

1. Nature of business

2. Location of business

3. Efficiency of management

4. Market situation

5. Special advantages