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A partner is guaranteed a minimum profit of ₹15,000, but his actual share of profit is ₹12,000. What is the deficiency to be made good?

Answer and explanation

Correct answer: ₹3,000

The governing concept is a minimum profit guarantee. A guarantee protects the partner up to the guaranteed amount; it does not mean that the guaranteed amount is automatically received in addition to the actual share. Since the guaranteed profit is ₹15,000 and the actual profit share is ₹12,000, the deficiency is calculated as ₹15,000 − ₹12,000 = ₹3,000. This amount must be contributed by the partner or partners bearing the guarantee, according to the partnership agreement. Thus option A is correct. Option B is only the actual share, option C is the guaranteed amount rather than the shortfall, and option D incorrectly adds the two figures. The actual share plus deficiency equals the guarantee: ₹12,000 + ₹3,000 = ₹15,000.

Related tags

Guaranteed ProfitDeficiencyProfit DistributionNumericalPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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