In the partnership deed A has guaranteed a minimum profit to B. If B's share falls short of the guaranteed amount, from where will the deficiency be met?

Correct answer: From A's profit share

A guarantee is a personal obligation of the guaranteeing partner — the guarantor must make good the shortfall. Therefore the deficiency is met from A's share of profit (or ultimately from A's capital if profit share is insufficient). It is not met from the firm's reserves or any government source, and it cannot be taken from B's drawings because drawings are B's personal withdrawals, not funds available to meet a guarantee. Exam tip: record the adjustment in Profit & Loss Appropriation — adjust by debiting A's Capital and crediting B's Capital for the deficiency.