Question

Capital employed at the end of the year is 4,20,000. Profit earned * 40.000. Average capital employed will be?
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Answer 1

Answer:

38000

Explanation:

end of the year - profit on earned 420000 - 40000 equal to 380000

Answer 2

GIVEN : Profit earned in a year = 40,000 ; capital employed at the end of the year = 4,20,000

TO FIND: Average Capital employed

SOLUTION :

Average Capital employed is the capital employed in the beginning of the year and at the end of the year divided by two.

Average Capital Employed = $\frac{Capital Employed in the beginning of the year+ Capital Employed at the end of the year }2}$

So here we don't know how much capital  is employed  in the beginning so we will calculate it first and we will suppose it as x.

Capital Employed at the end of the year = Capital Employed in the beginning + Profit of the year

4,20,000 = x + 40,000

4,20,000 - 40,000 = x

3,80,000 = x

So the capital employed in the beginning of the year is 3,80,000.

Average Capital Employed = $\frac{4,20,000 + 3,80,000}{2}$

                                              = $\frac{8,00,000}{2}$

                                               = 4, 00,000

Average Capital Employed is 4,00,000.