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The deed allows B a five percent commission on sales. On what basis is this commission given?

Answer and explanation

Correct answer: On the basis of sales

A commission described as a percentage of sales is calculated on the firm’s sales amount. If sales are S, the commission is 5% of S, or 0.05S, subject to the partnership deed. It is not calculated on capital, drawings, or loans. Therefore, option A correctly identifies the basis specified by the deed.

Related tags

Partnership DeedCommission On SalesPartnership AccountsCommission BasisPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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