Super profit refers to :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Difference between Average adjusted profit and Normal profit

Normal profit is what a firm with the same capital earns at the normal rate of return in that industry. Super profit is the excess of the average (adjusted) profit over the normal profit.

Normal profit = Capital employed × Normal rate of return ÷ 100
Super profit = Average profit − Normal profit

Why the other options are incorrect

Option (1) Abnormal profits earned by the partnership firm. — Incorrect. Abnormal or non-recurring gains are removed when the average profit is adjusted; super profit is a measured excess, not an abnormal item.
Option (2) Difference between Normal profit and profit as shown by Profit and Loss A/c — Incorrect. Super profit uses the average adjusted profit of past years, not the profit of one Profit and Loss Account.
Option (4) Capital multiplied by Normal Rate of Return — Incorrect. This product is the normal profit itself.

NCERT (2026-27 edition):
Super Profits Method – “… But it is contended that the buyer’s real benefit does not lie in total profits; it is limited to such amounts of profits which are in excess of the normal return on capital employed in similar business. Therefore, it is desirable to value, goodwill on the basis of the excess profits and not the actual profits. The excess of actual profits over the normal profits is termed as super profits.”

NCERT (2026-27 edition):
Super Profits Method – “… 1. Calculate the average profit, 2. Calculate the normal profit on the firm’s capital on the basis of the normal rate of return, 3. Calculate the super profits by deducting normal profit from the average profits, and 4. Calculate goodwill by multiplying the super profits by the given number of years’ purchase.”