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The capital employed is ₹400000 and the normal rate of return is 10%. What is the normal profit?

Answer and explanation

Correct answer: ₹40000

Normal profit = Capital employed × Normal rate of return. Therefore, ₹400000 × 10/100 = ₹40000, so option A is correct. Option B represents the entire capital employed, not the profit. In such questions, convert the percentage into a fraction or decimal and multiply it by the capital employed.

Related tags

GoodwillNormal ProfitCapital EmployedNormal Rate Of ReturnPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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