Question : When a similar type of business earns profit at a standard percentage of the Capital employed, it is called __________ .
Option 1: Normal return
Option 2: Interest on loan
Option 3: Interest on drawing
Option 4: Super profit
Correct Answer: Normal return
Solution : Answer = Normal return
When a business consistently earns profits at a standard percentage of its capital employed, it is termed a "normal return." This indicates a stable and predictable performance where the returns align with expectations based on the capital invested, ensuring a regular and expected level of profitability. Hence, the correct option is 1.
Question : Capital invested in the firms business is termed as
Option 1: Super profit
Option 2: Average profit
Option 3: Normal profit
Option 4: Capital employed
Question : ______________shows the relationship of profit (profit before interest and tax) with Capital Employed.
Option 1: Return on Equity
Option 2: Return on investment
Option 3: Net profit ratio
Option 4: Capital employed turnover ratio
Question : Under the super profit method, goodwill is calculated by
Option 1: Number of years purchase X Average profit
Option 2: Number of years purchase X Super profit
Option 3: super profit/normal rate of return
Option 4: super profit - normal profit
Question : Average of the profit of past agreed years is known as __________.
Option 1: super profit
Option 2: normal profit
Option 3: average profit
Option 4: capital employed
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile