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Tangible assets of the firm are ₹ 14,00,000 and outside liabilities are ₹ 4,00,000. Profit of the firm is ₹ 1,50,000 and normal rate of return is 10%. The amount of capital employed will be ______.

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Question

Tangible assets of the firm are ₹ 14,00,000 and outside liabilities are ₹ 4,00,000. Profit of the firm is ₹ 1,50,000 and normal rate of return is 10%. The amount of capital employed will be ______.

Options

  • ₹ 10,00,000

  • ₹ 1,00,000

  • ₹ 50,000

  • ₹ 20,000

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Solution

Tangible assets of the firm are ₹ 14,00,000 and outside liabilities are ₹ 4,00,000. Profit of the firm is ₹ 1,50,000 and normal rate of return is 10%. The amount of capital employed will be ₹ 10,00,000.

Explanation:

Capital employed = Tangible assets − Outside liabilities

= ₹ 14,00,000 − ₹ 4,00,000

= ₹ 10,00,000

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Chapter 2: Goodwill : Concept and Valuation - OBJECTIVE TYPE QUESTIONS [Page 2.33]

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D. K. Goel Accountancy Part 1 and 2 [English] Class 12 ISC
Chapter 2 Goodwill : Concept and Valuation
OBJECTIVE TYPE QUESTIONS | Q (B) 10. | Page 2.33
D. K. Goel Accountancy Part A Volume 1 and 2 [English] Class 12
Chapter 2 Change in Profit Sharing Ratio among the Existing Partners
OBJECTIVE TYPE QUESTIONS | Q (E) 19. | Page 2.103
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