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The capital employed is ₹16,00,000, the average profit is ₹2,40,000, and the normal rate of return is 13%. What is the super profit?

Answer and explanation

Correct answer: ₹32,000

Normal profit = Capital employed × Normal rate of return = ₹16,00,000 × 13% = ₹2,08,000. Therefore, super profit = Average profit − Normal profit = ₹2,40,000 − ₹2,08,000 = ₹32,000. ₹2,08,000 is the normal profit, not the super profit. In the exam, calculate normal profit first and subtract it from average profit.

Related tags

Partnership AccountsGoodwillSuper ProfitNormal ProfitPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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