The balance in Partners’ Capital Accounts is ₹ 7,00,000 and that in Advertisement Suspense A/c is ₹ 2,00,000. Their normal profits are ₹ 60,000 and super profits are ₹ 10,000. What is the normal rate of return?

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12% Explanation: Given: Partners’ Capital = ₹ 7,00,000 Advertisement Suspense A/c (fictitious asset) = ₹ 2,00,000 Normal Profits = ₹ 60,000 Super Profits = ₹ 10,000 Capital Employed = Partners’ Capital − Fictitious Assets = 7,00,000 − 2,00,000 = ₹ 5,00,000 Average Profits = Normal Profits + Super Profits = 60,000 + 10,000 = ₹ 70,000 NRR = `("Normal Profit")/"Capital Employed"xx 100 = (60,000)/(5,00,000)xx100 = (60,00,000)/(5,00,000)` = 12%

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