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Under the average profit method of goodwill valuation, the total adjusted profit for four years is ₹240000. What is the average profit?

Answer and explanation

Correct answer: ₹60000

Average profit = Total adjusted profit ÷ Number of years. Therefore, ₹240000 ÷ 4 = ₹60000. Option B represents the total profit, not the average, while options C and D result from incorrect division. In exams, always divide the total adjusted profit by the number of years used.

Related tags

Average ProfitGoodwill ValuationAdmission Of PartnerAccountancy NumericalGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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