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Profit is Rs. 100,000 and a 10% general reserve is to be created. What will be the remaining profit after creating the reserve?

Answer and explanation

Correct answer: Rs 90,000

General reserve = 10% of Rs. 100,000 = Rs. 10,000. Remaining profit = Rs. 100,000 − Rs. 10,000 = Rs. 90,000. Option B is incorrect because it gives the reserve amount, not the remaining profit; option C is wrong because it adds the reserve instead of deducting it; option D would correspond to a higher reserve (e.g. 20%) and is therefore incorrect. Exam tip: convert percentage to decimal (0.10) to find the reserve quickly, then subtract from total profit.

Related tags

ReserveGeneral ReservePartnership AccountsAdjustmentsProfit CalculationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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