Accountants Do Not Recognise Internally Generated Goodwill Because

question 3

Multiple Choice

Accountants do not recognise internally generated goodwill because:

• A) it is immaterial.
• B) it is not a partnership asset.
• C) it cannot be measured reliably.
• D) it will not provide a future economic benefit.

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities and rent for the manufacturing facility.

Administrative Expenses

Costs related to the general management and administration of a business, such as salaries of executive officers and costs of the legal department.

Net Operating Income

A financial metric that shows a company's profitability from its core business operations, excluding expenses and incomes from other sources.

Planning Budget

An estimate of future revenues and expenses that serves as a financial roadmap for an organisation.