Net profit is Rs 1,20,000 and a partner's commission is fixed at 5% on net profit. If the commission is paid on the net profit itself, what is the commission amount?

Correct answer: Rs 6,000

Commission is 5% of the net profit. Calculation:
Commission = Rs 1,20,000 × (5/100) = Rs 6,000.
Why other options are wrong: Rs 12,000 would be 10% (a common doubling error) and Rs 1,14,000 is the remaining profit after subtracting the commission, not the commission itself. Exam tip: always apply percent as amount × (percent/100) to avoid confusion between commission and remaining profit.