Question

The balance in Partners’ Capital Accounts is ₹ 7,00,000 and that in Advertisement Suspense A/c is ₹ 2,00,000. Their normal profits are ₹ 60,000 and super profits are ₹ 10,000. What is the normal rate of return?

विकल्प

• 14%

• 12%

• 10%

• 8.57%

Answer 1

12%

Explanation:

Given:

Partners’ Capital = ₹ 7,00,000

Advertisement Suspense A/c (fictitious asset) = ₹ 2,00,000

Normal Profits = ₹ 60,000

Super Profits = ₹ 10,000

Capital Employed = Partners’ Capital − Fictitious Assets

= 7,00,000 − 2,00,000

= ₹ 5,00,000

Average Profits = Normal Profits + Super Profits

= 60,000 + 10,000

= ₹ 70,000

NRR = `("Normal Profit")/"Capital Employed"xx 100`

= `(60,000)/(5,00,000)xx100`

= `(60,00,000)/(5,00,000)`

= 12%