Match the following list 1 with list 2.
| LIST 1 | LIST 2 |
| A) Favourable location | I) Excess of actual profit over normal profit |
| B) High risk | II) Sale of machinery |
| C) Super profit | III) More goodwill |
| D) Capital profit | IV) Less goodwill |
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- A-III, B-IV, C-I, D-II.
| LIST 1 | LIST 2 |
| A) Favourable location | III) More goodwill |
| B) High risk | IV) Less goodwill |
| C) Super profit | I) Excess of actual profit over normal profit |
| D) Capital profit | II) Sale of machinery |
*Favourable location- If any business is located at a favourable place where customer can easily come and purchase goods which make the sales to increase and ultimately the value of goodwill will be higher.
*High risk- If the risk faced by the business are higher than normal, then the business will have less goodwill whereas if the business faces less risk then it will have higher goodwill.
* Super profit is earned by a firm when there actual profit is more than the normal profit i.e.profit earned by similar business.
* Capital profit- Sale of machinery is a capital profit for the business.