If last four profits are rupees one lakh fifty thousand two lakh two lakh fifty thousand and three lakh and profits are rising fast which average method is better?

Correct answer: Weighted average profit method

The direct answer is option B: the weighted average profit method. The four profits show a clear rising trend: ₹1,50,000, ₹2,00,000, ₹2,50,000 and ₹3,00,000. In a rising business, the recent profit usually gives a better indication of the present and future earning capacity than an old profit. The weighted average method gives larger weights to recent years, so the latest profit affects the average more strongly. Option B is correct for this reason. Option A, simple average, gives every year equal importance; it can be used in suitable cases, but it is less responsive to a rapid upward trend. Option C, only net asset method, is not an average-profit method and values the business mainly through net assets rather than the stated profit trend. Option D, no average method, is wrong because an appropriate average method can be selected and the question specifically asks which is better. A simple illustration is to attach small weights to older years and larger weights to newer years, then divide the total weighted profit by the total weights. The exam cue is: rising profits favour weighted average; stable profits may suit simple average. The choice still assumes the profits are normal and comparable.