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Question
________ is the difference between actual profit and normal profit.
________ is the difference between actual profit and normal profit.
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Solution
The correct option is A Super profit
The actual benefit of buyer do-not lie in total profits but is lies in the amount which is earned in excess of normal returns on capital employed. Hence, it is advisable that Goodwill to be valued on the basis of excess profits and not normal profit.
Therefore, the Excess of Actual Profits over Normal Profit are termed as Super Profit.
The actual benefit of buyer do-not lie in total profits but is lies in the amount which is earned in excess of normal returns on capital employed. Hence, it is advisable that Goodwill to be valued on the basis of excess profits and not normal profit.
Therefore, the Excess of Actual Profits over Normal Profit are termed as Super Profit.
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