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On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000partners capital accounts showed bal of 60,000.the current liabilities were 10,000and the bal constitued the reserve .if the normal rate of returns is 8%the goodwil of the firm ia valued at 60,000at four years purchase of super profit ,find the average profit of the firm
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On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000...
Calculation of Average Profit:
- Total Assets = 1,00,000
- Stock = 20,000
- Partners' Capital = 60,000
- Current Liabilities = 10,000
- Goodwill = 60,000

Step 1: Determine the Capital Employed
Capital Employed = Total Assets - Stock
Capital Employed = 1,00,000 - 20,000
Capital Employed = 80,000

Step 2: Calculate Super Profit
Super Profit = Goodwill - Normal Rate of Return on Capital Employed
Super Profit = 60,000 - (8% of 80,000)
Super Profit = 60,000 - 6,400
Super Profit = 53,600

Step 3: Find Average Profit
Average Profit = Super Profit / Number of Years Purchase
Number of Years Purchase = Goodwill / Super Profit
Number of Years Purchase = 60,000 / 53,600
Number of Years Purchase = 1.12
Average Profit = Super Profit / Number of Years Purchase
Average Profit = 53,600 / 1.12
Average Profit = 47,857.14
Therefore, the average profit of the firm is 47,857.14. This value represents the sustainable level of profit that the firm can generate over time, taking into account the goodwill and super profit calculations.
Community Answer
On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000...
answer is coming 23,800
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With an aim to check flow of black money and evasion of taxes through stock market, market regulator SEBI has decided to impose hefty penalty on brokers facilitating such transactions from tomorrow. The regulator recently came across a loophole in its existing regulations, which was being abused by stock brokers for facilitating tax evasion and flow of black money through fictitious trades in lieu of hefty commissions. To remove this anomaly, SEBI has asked stock exchanges to penalise the brokers transferring trades from one trading account to another after terming them as ‘punching’ errors. The penalty could be as high as 2% of the value of shares traded in the ‘wrong’ account, as per new rules coming into effect from August 1.In a widely-prevalent, but secretly operated practice, the people looking to evade taxes approach certain brokers to show losses in their stock trading accounts, so that their earnings from other sources are not taxed. These brokers are also approached by people looking to show their black money as earnings made through stock market. In exchange for a commission, generally 5-10% of the total amount, these brokers show desired profits or losses in the accounts of their clients after transferring trades from other accounts, created for such purposes only.The brokers generally keep conducting both ‘buy’ and ‘sell’ trades in these fictitious accounts so that they can be used accordingly when approached by such clients.In the market parlance, these deals are known as profit or loss shopping. While profit is purchased to show black money as earnings from the market, the losses are purchased to avoid tax on earnings from other sources.As the transfer of trades is not allowed from one account to the other in general cases, the brokers show the trades conducted in their own fictitious accounts as ‘punching’ errors. The regulations allow transfer of trades in the cases of genuine errors, as at times ‘punching’ or placing of orders can be made for a wrong client. To check any abuse of this rule, SEBI has asked the bourses to put in place a robust mechanism to identify whether the errors are genuine or not. At the same time, the bourses have been asked to levy penalty on the brokers transferring their non-institutional trades from one account to the other. The penalty would be 1% of the traded value in wrong account, if such trades are up to 5% of the broker’s total non-institutional turnover in a month. The penalty would be 2% of trade value in wrong account, if such transactions exceed 5% of total monthly turnover in a month.Q. Which of the following options is true according to the given passage?

With an aim to check flow of black money and evasion of taxes through stock market, market regulator SEBI has decided to impose hefty penalty on brokers facilitating such transactions from tomorrow. The regulator recently came across a loophole in its existing regulations, which was being abused by stock brokers for facilitating tax evasion and flow of black money through fictitious trades in lieu of hefty commissions. To remove this anomaly, SEBI has asked stock exchanges to penalise the brokers transferring trades from one trading account to another after terming them as ‘punching’ errors. The penalty could be as high as 2% of the value of shares traded in the ‘wrong’ account, as per new rules coming into effect from August 1.In a widely-prevalent, but secretly operated practice, the people looking to evade taxes approach certain brokers to show losses in their stock trading accounts, so that their earnings from other sources are not taxed. These brokers are also approached by people looking to show their black money as earnings made through stock market. In exchange for a commission, generally 5-10% of the total amount, these brokers show desired profits or losses in the accounts of their clients after transferring trades from other accounts, created for such purposes only.The brokers generally keep conducting both ‘buy’ and ‘sell’ trades in these fictitious accounts so that they can be used accordingly when approached by such clients.In the market parlance, these deals are known as profit or loss shopping. While profit is purchased to show black money as earnings from the market, the losses are purchased to avoid tax on earnings from other sources.As the transfer of trades is not allowed from one account to the other in general cases, the brokers show the trades conducted in their own fictitious accounts as ‘punching’ errors. The regulations allow transfer of trades in the cases of genuine errors, as at times ‘punching’ or placing of orders can be made for a wrong client. To check any abuse of this rule, SEBI has asked the bourses to put in place a robust mechanism to identify whether the errors are genuine or not. At the same time, the bourses have been asked to levy penalty on the brokers transferring their non-institutional trades from one account to the other. The penalty would be 1% of the traded value in wrong account, if such trades are up to 5% of the broker’s total non-institutional turnover in a month. The penalty would be 2% of trade value in wrong account, if such transactions exceed 5% of total monthly turnover in a month.Q. What does the word facilitating as used in the passage mean?

On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000partners capital accounts showed bal of 60,000.the current liabilities were 10,000and the bal constitued the reserve .if the normal rate of returns is 8%the goodwil of the firm ia valued at 60,000at four years purchase of super profit ,find the average profit of the firm
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On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000partners capital accounts showed bal of 60,000.the current liabilities were 10,000and the bal constitued the reserve .if the normal rate of returns is 8%the goodwil of the firm ia valued at 60,000at four years purchase of super profit ,find the average profit of the firm for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000partners capital accounts showed bal of 60,000.the current liabilities were 10,000and the bal constitued the reserve .if the normal rate of returns is 8%the goodwil of the firm ia valued at 60,000at four years purchase of super profit ,find the average profit of the firm covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On 1 april 2014 a firm had assets of 1,00,000excliding stock of 20,000partners capital accounts showed bal of 60,000.the current liabilities were 10,000and the bal constitued the reserve .if the normal rate of returns is 8%the goodwil of the firm ia valued at 60,000at four years purchase of super profit ,find the average profit of the firm.
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