Salaam,
AnS1.
Purchases of stationery is an expense and reduces the net profit.
Unless the business deals in trade of stationery, where its a purchase of stock. Cost of goods sold increases. Gross profit and thus net profit both decrease as a result.
ANS2-
Goodwill is an intangible asset. It is the value of the business over and above its net recordable assets. According to prudence concept, profits should not be overstated and all losses provided for. The assets must not be overvalued either. That's why goodwill is better not kept on the books. Keeping goodwill on the books may overstate opening capital. Accounts will present unrealistic view of business's financial position.
( Goodwill's sorta like an uncertain asset. Like I might say the value of my brand name and reputation in the firm is 60000 in addition to recorded fixed assets of 400000. But when I go sell my bizness, I only get 10000 for the brand name and reputation. The value of 60000 was unrealistic. It overstated my assets. Prudence not aapplied)
Hope this helped! By the way, I think this stuff is supposed to be in the ACCOUNTING thread. It'll prbbly get locked by mods.
