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The profits for two years are ₹40,000 and ₹60,000, with respective weights of 1 and 3. What is the weighted average profit?

Answer and explanation

Correct answer: ₹55,000

Weighted average profit = \((₹40,000 \times 1 + ₹60,000 \times 3) \div (1+3)\) = ₹2,20,000 ÷ 4 = ₹55,000. Option B is the simple average, which incorrectly gives equal importance to both profits. Exam tip: Multiply each profit by its weight, add the products, and divide by the total weight.

Related tags

Partnership AccountsGoodwillWeighted AverageAverage ProfitPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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