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If the net profit is Rs 1,00,000 and a reserve of 10% is to be created, how much will be deducted before distribution?

Answer and explanation

Correct answer: Rs 10,000

Reserve is 10% of profit. Calculate: \(10\% \times 1,00,000 = 10,000\). Therefore Rs 10,000 will be deducted before distribution. Option B (Rs 90,000) reflects the remaining profit after reserve, not the amount to be deducted; option C (Rs 11,000) is an incorrect percentage. Exam tip: convert percent to decimal (10% = 0.10) and multiply to avoid calculation mistakes.

Related tags

ReserveProfit AppropriationPartnership AccountsNumerical ProblemAccounting BasicsProfit DistributionPartnership Accounts Basic ConceptsAccountancy

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