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A is guaranteed a minimum profit of rupees twenty thousand. His actual share of profit is rupees seventeen thousand. What is the deficiency?

Answer and explanation

Correct answer: Rupees three thousand

A minimum-profit guarantee ensures that A receives at least ₹20,000. Since his actual share is only ₹17,000, the deficiency is calculated as guaranteed amount minus actual amount: ₹20,000 − ₹17,000 = ₹3,000. The guarantor or the partners responsible under the partnership agreement must make this adjustment so that A ultimately receives the guaranteed minimum, subject to the stated terms. Therefore, option A is correct. ₹17,000 is the actual share, not the shortfall; ₹20,000 is the guaranteed amount, not the deficiency; and ₹37,000 incorrectly adds the two figures.

Related tags

Minimum Profit GuaranteeDeficiencyProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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