Match List - I with List - II.

Choose the correct answer from the options given below:

(A)-(IV), (B)-(I), (C)-(II), (D)-(III)

The correct answer is Option (1) → (A)-(IV), (B)-(I), (C)-(II), (D)-(III)

(A) No. of years purchase - (IV) No. of years the firm continues to earn the same profit. Expected years for which returns are anticipated to accrue. This is the no of years which is expected by the firm in which they are going to earn the same amount of profit due to the past profits.

(B) Super profit - (I) Excess of average profit over normal profit. Super profit  is earned by a firm when there actual profit is more than the normal profit i.e. profit earned by a similar business.

(C) Normal profit - (II) Expected profit in the industry. Normal profit is calculated in the context of valuing goodwill by multiplying the firm's capital by the normal rate of return. The normal rate of return represents the expected or standard rate of return on the capital employed in a similar business. To calculate the normal profit, the firm's capital, which includes partners' capital and reserves and surplus, is multiplied by the normal rate of return. This calculation provides an estimate of the expected profit that would be considered normal for a business of a similar nature and capital investment. The normal profit serves as a benchmark or baseline against which the excess or super profits are measured when valuing goodwill based on the super profits method.

(D) Average profit - (III) Total profit divided by the number of years. Divide the total of all year's profit by The number of years and just divide the total profit by the no of years for which profit is taken to find out the average profit of the firm.