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The deed states that twenty percent of profit will be transferred to the general reserve. If the total profit is Rs 90000, what amount will be transferred to the reserve?

Answer and explanation

Correct answer: Rs 18000

The reserve is 20% of profit. So Reserve = \(90000 \times \frac{20}{100} = 18000\). Option C (Rs 20000) is incorrect because it represents 20% of Rs 100000, not of Rs 90000. Exam tip: convert the percentage to a fraction and multiply by the base amount, or directly apply the % operator to avoid calculation errors.

Related tags

Partnership AccountsPartnership DeedGeneral ReservePercentage CalculationAppropriationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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