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Question
Money value of business reputation is called _______.
Money value of business reputation is called _______.
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Solution
The correct option is B Goodwill
Goodwill is one of the aspect of partnership accounts which requires adjustment at the time of reconstitution of a firm. Over a period of time, a well-established business develops an advantage of good name, reputation and wide business connections. This helps the business to earn more profits as compared to a newly set up business. In accounting, the monetary value of such advantage is known as "goodwill". It is regarded as an intangible asset. In other words, goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits. In simple words, goodwill can be defined as "the present value of a firm's anticipated excess earnings" or as "the capitalized value attached to the differential profit capacity of a business."
Goodwill is one of the aspect of partnership accounts which requires adjustment at the time of reconstitution of a firm. Over a period of time, a well-established business develops an advantage of good name, reputation and wide business connections. This helps the business to earn more profits as compared to a newly set up business. In accounting, the monetary value of such advantage is known as "goodwill". It is regarded as an intangible asset. In other words, goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits. In simple words, goodwill can be defined as "the present value of a firm's anticipated excess earnings" or as "the capitalized value attached to the differential profit capacity of a business."
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