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The capital employed is ₹9,00,000 and the normal rate of return is 11%. What will be the normal profit?

Answer and explanation

Correct answer: ₹99,000

Normal profit = Capital employed × Normal rate of return. Therefore, \(₹9,00,000 \times 11\% = ₹99,000\). Option B results from using a 10% rate, while option D is obtained by subtracting the profit from the capital. Exam tip: multiply capital employed by the normal rate of return to find normal profit.

Related tags

GoodwillNormal ProfitCapital EmployedPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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