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If 20% of the profit is to be transferred to reserve and the total profit is ₹50,000, what is the reserve amount?

Answer and explanation

Correct answer: Ten thousand rupees

Reserve = 20% of profit. 20% = 0.20 so reserve = 0.20×₹50,000 = ₹10,000. The remaining profit ₹40,000 is available for distribution. Option B (₹20,000) would correspond to 40% and is therefore incorrect; option C is the full profit and option D equals 10% — both wrong. Exam tip: convert the percentage to a decimal (20% → 0.20) and multiply by the amount for a quick calculation.

Related tags

ReserveNumericalProfit DistributionPartnership AccountsBasic ConceptsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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