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Why is a partner's commission written in the partnership deed?

Answer and explanation

Correct answer: To decide the partner's eligibility and calculate the commission

The governing concept is contractual remuneration under a partnership agreement. A partner is not automatically entitled to commission merely because the partner participates in sales or helps the firm earn profit. The deed records whether the partner is eligible and establishes the basis, rate, amount, period, and conditions for calculation. For example, it may provide a fixed amount or a stated percentage of net profit or sales; the exact base must be read carefully because different bases produce different amounts. Thus, option A is correct. Removing sales tax is a matter of tax law, stopping cash sales is an operational decision, and destroying goods is unrelated to remuneration. None of those activities explains why a commission clause is included in the deed.

Related tags

Partner CommissionPartnership DeedProfit AppropriationClass 12 AccountancyPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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