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Average profit is ₹110000 and normal profit is ₹85000. What will be the super profit?

Answer and explanation

Correct answer: ₹25000

The governing concept is super profit, which measures the excess of average profit over normal profit. Apply the formula: Super Profit = Average Profit − Normal Profit. Substituting the given values gives ₹1,10,000 − ₹85,000 = ₹25,000. Therefore, option A is correct. Option B is merely the normal profit, and option C repeats the average profit without making the required deduction. Option D results from adding the two figures, but addition is not used in super-profit calculation. The result of ₹25,000 represents the additional earning attributable to the firm’s goodwill or superior earning capacity, before any further goodwill multiplier is applied.

Related tags

GoodwillSuper ProfitNumericalPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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