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Question
Capital employed by a partnership firm is ₹ 5,00,000. Its average profit is ₹ 60,000. The normal rate of retum in similar type of business is 10%. What is the amount of super profits?
Options
₹ 50,000
₹ 10,000
₹ 6,000
₹ 56,000
MCQ
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Solution
₹ 10,000
Explanation:
Given:
Capital Employed = ₹ 5,00,000
Average Profit = ₹ 60,000
Normal Rate of Return = 10%
Normal Profit = Capital Employed `xx "Normal Rate of Return"/100`
= `5,00,000xx10/100`
= ₹ 50,000
Super Profits = Average Profit − Normal Profit
= 60,000 − 50,000
= ₹ 10,000
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