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A firm has an average profit of ₹1,35,000, capital employed of ₹9,00,000, and a normal rate of return of 10%. What will be the firm’s super profit?

Answer and explanation

Correct answer: ₹45,000

Normal profit = Capital employed × Normal rate of return = ₹9,00,000 × 10% = ₹90,000. Super profit = Average profit − Normal profit = ₹1,35,000 − ₹90,000 = ₹45,000. Therefore, option A is correct. Option B is only the normal profit, not the super profit. Exam tip: Remember the formula—Super profit = Average profit − Normal profit.

Related tags

GoodwillSuper ProfitNormal ProfitCapital EmployedPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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