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If a guaranteed partner's actual share of profit is more than the guaranteed amount, how much will he receive?

Answer and explanation

Correct answer: Actual higher share

A guarantee is a minimum assured amount, not a cap. When the partner’s actual share exceeds the guaranteed amount, the partner receives the actual (higher) share. Option B is incorrect because guarantee is not the maximum payable; option C is wrong because the firm does not pay both the guarantee and the actual share separately (no double payment). Exam tip: Treat the guarantee as a floor — always compare actual share with the guarantee and pay the higher amount.

Related tags

Partnership AccountsGuaranteed ProfitsProfit DistributionAccountancyClass 12Partnership Accounts Basic ConceptsClass 12 Mcq

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