If the deed gives a partner commission only on sales, how is it different from commission on profit?

Correct answer: It is based on sales amount, not profit

Direct answer: Option A is correct. Sales commission is calculated on the value of sales, while profit commission is calculated on profit. First identify the base mentioned in the deed. If sales are Rs 5,00,000 and the rate is 2%, sales commission is Rs 10,000, whether the firm earns a small profit, a large profit, or even suffers a loss, subject to the deed’s terms. Profit commission uses profit as its base, so a change in profit changes the commission. Option A works because it correctly distinguishes sales from profit. Option B is wrong because commission may be allowed when the deed provides it. Option C is wrong because drawings are withdrawals by a partner and are not the base here. Option D is wrong because capital is the amount invested and is also not the stated base. Remember: always read the words after “commission on”; sales means turnover, and profit means profit.