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The deed says commission to partners will be allowed only after creating reserve. Why is this order important when profit is low?

Answer and explanation

Correct answer: Because reserve is deducted first and commission base may change

The order in the deed changes the calculation base. If reserve is deducted first profit left for commission becomes lower.

Related tags

ReserveCommissionPriority ClausePartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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