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A is to receive a commission of 10% of the total profit before profit distribution. If the total profit is ₹88,000, what will be A’s commission?

Answer and explanation

Correct answer: ₹8,800

Since the commission is calculated on the total profit before profit distribution, commission = 10% × ₹88,000 = ₹8,800. Option A, ₹8,000, would apply if the commission were 10% of profit after charging the commission, which is not the case here. Exam tip: When the wording says ‘of total profit’, apply the stated percentage directly to the given total profit.

Related tags

Partnership AccountsPartner CommissionProfit DistributionAdjustmentsProfit CalculationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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