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The profit earned… (Class 12 Accountancy SQP 2024-25, Q5)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 1 mark · MCQ

CBSE Class 12 Accountancy sample paper 2024-25: question 5

From the official CBSE sample question paper for 2024-25, section A, question 5, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q5 · 1 mark · MCQAccounting for Partnership: Basic Concepts

The profit earned by a firm after retaining ₹ 15,000 to its reserve was ₹ 75,000. The firm had total tangible assets worth ₹ 10,00,000 and outside liabilities ₹ 3,00,000. The value of the goodwill as per capitalization of average profit method was valued as ₹ 50,000. Determine the rate of Normal Rate of Return.

  1. (A)10 %
  2. (B)5 %
  3. (C)12 %
  4. (D)8 %

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

Open one hint at a time and try again before the next.

Hint 1

Profit retained in a reserve is still profit earned.

Hint 2

Goodwill = capitalised value of profit − capital employed.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Transfer to reserve is an appropriation, so average profit = ₹ 75,000 + ₹ 15,000 = ₹ 90,000. Capital employed = ₹ 10,00,000 − ₹ 3,00,000 = ₹ 7,00,000.

  2. Capitalised value = ₹ 7,00,000 + goodwill ₹ 50,000 = ₹ 7,50,000 = ₹ 90,000 × 100/rate, so rate = 12%. Option (C).

    1 mark

Answer: (C) 12 %

Where the marks are

  • Profit before transfer to reserve ₹ 90,000 capitalised to ₹ 7,50,000 (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Accounting for Partnership: Basic Concepts, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.