Assertion (A): Goodwill is an intangible asset because of which an enterprise is likely to earn higher profits without putting in extra efforts.
Assertion (A): Goodwill is an intangible asset because of which an enterprise is likely to earn higher profits without putting in extra effort.
Reason (R): Goodwill is an intangible asset as it exists but does not have a physical existence. Also, if an enterprise enjoys goodwill, it will have repeated customers and will also attract more customers due to which sales will increase and thus the profits.
In the context of the above two statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(c) Assertion (A) is correct but the Reason (R) is not correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Anurag Pathak Changed status to publish April 18, 2023
Ans – b)
Explanation:-
Goodwill is an intangible asset and does not have any physical existence.
Goodwill is the reputation that a business enjoys as a result of its good service and product.
The customers prefer and also recommend to their known.
Thus an enterprise will have repeated customers and will also attract more customers due to which sales will increase and thus the profits.
Anurag Pathak Changed status to publish April 18, 2023
