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Partner A is to receive commission at 12% of profit after charging such commission. Profit before commission is ₹1,12,000. What is the commission?

Answer and explanation

Correct answer: ₹12,000

This is a commission-after-charging calculation. When commission is based on profit after charging the commission itself, the commission is not calculated simply as 12% of the profit before commission. The correct formula is: commission = profit before commission × rate/(100 + rate). Thus, commission = ₹1,12,000 × 12/112 = ₹12,000. The remaining profit after commission is ₹1,00,000, and 12% of that amount is indeed ₹12,000, confirming the answer. Option B incorrectly applies 12% directly to ₹1,12,000; the other figures also use an incorrect base or rate.

Related tags

PartnershipAdjustmentsCommission After ChargingProfit CalculationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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